Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

Oral Answers to Questions — BRITISH ARMY

Union Jacks

Mr. Remnant: asked the Secretary of State for War to what extent Army units at home and overseas are entitled to fly the Union Jack between sunrise and sunset; and whether this national flag is an Ordnance issue.

The Secretary of State for War (Mr. Antony Head): The Union Jack may be flown by any unit. It is provided at public expense for authorised flag stations.

Rifle Hall, Wick

Sir D. Robertson: asked the Secretary of State for War if he is aware of the agreement reached at a meeting in Wick in January, when the Under-Secretary of State and the General Officer Commanding in Scotland met representatives of the Territorial Forces Association, the Provost and Town Clerk of Wick and the hon. Member for Caithness and Sutherland, for the partial use, by the people of Wick, of the Rifle Hall which they built and paid for; why it has not been carried out; and what steps he intends to take to honour the agreement.

Mr. Head: Yes, Sir. I was informed by my hon. Friend the Under-Secretary of State that there had been difficulties and he went personally to Wick to try to settle them. This he hoped had been achieved, but since the meeting I understand that the local Territorial and Auxiliary Forces Association state that there was some misapprehension. I am trying to sort it out.

Sir D. Robertson: Will my right hon. Friend expedite this, because it is six months since this meeting took place and it is not right that the people who bought

and paid for this hall for joint use by themselves and the military should be totally excluded from it. That did not happen in two world wars. Why should it happen in peace?

Mr. Head: I can assure my hon. Friend that I am trying to sort it out, but it is difficult to get things sorted out quickly when there is something of a deadlock locally.

Mr. Ede: Are we to understand that peace has not yet broken out in Wick?

Requisitioned Land, Brighton

Mr. H. Johnson: asked the Secretary of State for War if he will fix an early date when his Department will derequisition land at The Level, Brighton, and will remove therefrom the seven huts used by the Royal Engineers Records Office.

Mr. Head: I regret that I can hold out no hope of an early start on the new building which is needed before this site can be given up.

Mr. Johnson: Is the Minister aware that this land is reserved by Act of Parliament as a public open space, is in the centre of a very populous area and is badly needed by Brighton Corporation for its proper use as a children's playground?

Mr. Head: Yes, Sir, I am aware of those facts, but I cannot give up the buildings until we have somewhere to put these R.E. Records. I want to build a great many things, but the problem with building is to get the labour, materials and money.

Mr. Johnson: Is my right hon. Friend aware that local estate agents have offered him many highly desirable properties in which to house these officers of the records office who are now in Nissen huts? Could he not consider purchasing some of the very highly desirable properties in the county borough of Brighton?

Mr. Head: My information is that although they may be highly desirable the price is also very high.

Mr. Colegate: Are there no historic houses which could be used for the purpose?

Mr. Head: I cannot answer that without notice.

Overseas Deceased Soldiers (U.K. Interment)

Mr. Hale: asked the Secretary of State for War (1) whether he is aware that Mr. and Mrs. Winterbottom, Salem, Oldham, recently informed that their son, 22592235 Trooper Jack Winterbottom, had been killed on manoeuvres in Germany, have been told that to bring back his body for burial in Oldham will cost them £100, and that his Department can give no help by gift, grant or loan; and why this is the practice of his Department;
(2) why he has refused to bring back to England for burial the body of Trooper Jack Winterbottom, 3rd King's Own Hussars, recently killed while on manoeuvres in Germany.

Mr. Head: With permission, I will answer Questions No. 6 and No. 7 together.

Mr. Hale: On a point of order. I am not prepared to give permission in this case. These are two separate Questions. One raises the amount of the payment and the other raises an important general principle of interest to hon. Members on both sides. It is not a matter to be treated cavalierly, and I am not prepared to give permission.

Mr. Head: It is not a matter of treating it cavalierly.

Mr. Speaker: If the hon. Member hears the answer he may ask a supplementary question.

Mr. Head: As far as Question No. 6 is concerned, the cost of bringing back the body from Germany is considerably less than it would be were it a civilian. That is to say, we have cut rates for this purpose.
As far as Question No. 7 is concerned, those who are killed or die abroad are buried where they have died. However, in this case, or any other in overseas theatres except Korea, the body may be brought home if the relatives so wish. While my Department gives every help in this matter, it cannot undertake to bear the cost.

Mr. Hale: So far as Question No. 6 is concerned, why does the right hon. Gentleman say that the cost is cut when people are being charged much more than the air fare if an adult person goes

to Germany and back? So far as Question No. 7 is concerned, is the right hon. Gentleman aware that last week in Oldham two young lads had military funerals who had been killed on manœuvres, and that in both cases parents were charged money for bringing back the bodies of their sons, whereas in the case of a high-ranking officer or an American pilot, the body would be brought back here without charge? In those circumstances, will the right hon. Gentleman reconsider the practice and meet what, I am sure, is the wish of this House?

Mr. Head: As regards the first part of the question, it is true it is more expensive to bring back a body than the normal fare. To bring one back by air from the Middle East costs something like £600. It is the same in the case of Germany: it is more expensive. As regards the question of bringing back bodies, it has been the policy in all the Services for a very long time indeed, before the last war, that all those who died or were killed overseas were buried there, but we leave this option open, and I do not think that there is any question of changing this policy at the moment.

Sir H. Sutcliffe: Can my right hon. Friend say if there is any possibility of reducing the high charge still further, because it does prevent many people from bringing their sons or other relatives home? Will he confirm again that there is no difference being made between those killed in war and those who meet their deaths accidentally during peace time? One of those young men to whom the hon. Member for Oldham, West (Mr. Hale) referred, came from my constituency.

Mr. Head: I can give the assurance that no difference is made in that way. As regards the cost, I have been into that, and the right hon. Gentleman the Member for Easington (Mr. Shinwell), when the was in my position, also made a careful inquiry into this question of costs, and we have cut the rates to a very considerable degree.

Mrs. Mann: Would the right hon. Gentleman consider the case before him of one of my constituents, whose son was run down in an accident four days before he was due to leave Egypt? The mother scrambled together with great hardship


£120 to get her boy home, but actually required £180, and could not get the £60 more and had to abandon the project. Does the right hon. Gentleman not think in those circumstances, and as there was an accident, that that extra £60 might have been advanced to help that poor mother?

Mr. Head: I assure the hon. Lady that I do appreciate that these are very distressing cases, and I know how strongly some people feel on this subject, but were we, all three Services, to embark on bringing home all those who died overseas, we should get into a very large commitment indeed.

Pay and Allowances

Mr. Swingler: asked the Secretary of State for War by how much the cost of living has risen since the present rates of Army pay and allowances were fixed; and what action he is taking to review these rates.

Mr. Head: The Interim Index of Retail Prices for September, 1950, when the present rates of pay were introduced, was 114; the corresponding figure for May, 1953, was 140. I keep a very close watch on Army pay and allowances.

Mr. Swingler: Is the right hon. Gentleman aware that, as these men and their wives have no trade union, he ought to put in for a wage increase for them from the Treasury? Has he done so, or considered doing it, in view of the very substantial increase in the cost of living that has taken place?

Mr. Head: I can assure the hon. Gentleman that the thoughts passing through his head are not absent from mine.

Nesscliffe Camp, Oswestry

Mr. Emrys Hughes: asked the Secretary of State for War if his attention has been drawn to the remarks of Mr. Justice Finnemore at the Assizes at Stafford on 2nd July, in which he called attention to the collection of weapons in the possession of soldiers stationed at Nesscliffe Camp, Oswestry; and what action he proposes to take in the matter.

Mr. Head: Yes, Sir An immediate and drastic inquiry was made at Nesscliffe Camp. A special search was

carried out, but no offensive weapons were found. Apart from the two weapons used in this particular case, two coshes were found last November on waste land near the camp. Their ownership is unknown. It is an offence in the Army, as in civil life, to carry such weapons. It was, however, disclosed that a small number of ill-intentioned National Service men in the camp had formed a gang. Two of these men have already completed their service, four are awaiting trial and the remainder have been posted elsewhere. The military police in Oswestry have been reinforced and all soldiers at Nesscliffe Camp are forbidden to visit Oswestry in plain clothes.

Mr. Hughes: Had these ex-Service men any previous records of convictions? Is the right hon. Gentleman aware that the judge referred to the appalling collection of weapons in this camp? Is he aware that a search was conducted? What weapons are left in the camp?

Mr. Head: A thorough search was made and no weapons were found. The hon. Gentleman will be aware that the Army, and, indeed, all the Services, take boys who have had records of Borstal or previous sentences, and sometimes these boys do gang up together. It is a problem with which the Army has to cope. Oswestry has always been a rather difficult area, and there is no doubt at all there was a gang formed up. It has now been dispersed, and I hope the measures I have taken will prevent a recurrence.

Oral Answers to Questions — WAR GRAVES (HEADSTONE ENGRAVINGS)

Colonel Crosthwaite-Eyre: asked the Secretary of State for War what sums the Imperial War Graves Commission have asked to be paid by the next-of-kin of those buried in cemeteries under their control, as a contribution towards the cost of engraving the headstones to be erected.

Mr. Head: The Imperial War Graves Commission have not at any time asked the next-of-kin to contribute to the cost of engraving, or erecting, headstones on war graves. The next-of-kin have the right to choose a personal inscription, in


addition to the name and service particulars, to be engraved on the headstone. In order to meet the desire of many relatives to have a personal share in the Commission's work of commemoration, an opportunity has been given to them to contribute up to £1 towards the cost of engraving this personal inscription. As the Commission's letter to all next-of-kin explains, this is entirely voluntary, and if relatives do not wish to pay, the cost is borne by the Commission.

Colonel Crosthwaite-Eyre: Is my right hon. Friend aware that, while that is so, grave misunderstandings have occurred because of the terms of the recent letter sent out by the Imperial War Graves Commission? Can he say whether a new version is now being sent out and, if so, whether it will be sent to all those who received the previous letter and who may be under a misapprehension concerning the facts he has stated?

Mr. Head: Yes, Sir. A new letter has gone out and it now makes it abundantly clear that this contribution is entirely voluntary.

Oral Answers to Questions — TRADE AND COMMERCE

Dehydrated Vegetables

Sir L. Ropner: asked the President of the Board of Trade whether he will control the import of dehydrated vegetables.

The Secretary for Overseas Trade (Mr. H. R. Mackeson): Dehydrated vegetables imported from the sterling area, from Western Europe and certain other foreign countries are covered by an open general licence, and it is not proposed to restrict the quantities which may be imported from those countries. The producers of dehydrated vegetables have been advised that if they wish to make an application for an increase in the present rate of duty the Board of Trade will examine it.

Sir L. Ropner: Can my hon. Friend say whether there has been a considerable recent increase in the amount of imported dehydrated vegetables?

Mr. Mackeson: I have some figures here, but I should like to see that question in writing.

Mr. Bottomley: Can the hon. Gentleman say whether a record is being kept of the number of times he is pressed by his hon. Friends to re-introduce controls in one form or another?

Bananas (Import Licences)

Miss Burton: asked the President of the Board of Trade whether he is aware of the dissatisfaction felt by the London Fruit and Vegetables Trades Federation Limited over the basis of the allocation of banana import licences; and if, in view of this dissatisfaction and the representations made to his Department by the Federation, he will give further consideration to the matter.

Mr. Mackeson: As I promised the hon. Lady on 5th May, sympathetic consideration has been given to cases of substantial hardship which may have arisen from the method of allocating import licences for bananas. The London Fruit and Vegetable Trades Federation have been informed of the action taken in the cases which they put forward, and they have now expressed themselves satisfied.

Miss Burton: Is the hon. Gentleman aware that there will be considerable satisfaction over this? Is he aware that the Federation thought the basis of allocation did prohibit genuine imports into this country?

Mr. Mackeson: I am grateful to the hon. Lady.

Wool Cloths (Fibre Content)

Miss Burton: asked the President of the Board of Trade whether he is now in a position to make a statement concerning those standards agreed by the British Standards Institution for standard description of fibre content of wool cloths.

The Parliamentary Secretary to the Board of Trade (Mr. Henry Strauss): I understand that a large measure of agreement has now been reached and that the British Standards Institution expects soon to make an announcement.

Miss Burton: Does the hon. and learned Gentleman hope it may be possible to make an announcement on this matter before the House rises for the Summer Recess?

Mr. Strauss: I am afraid I cannot give the date.

Anglo-Spanish Trade

Mr. G. Jeger: asked the President of the Board of Trade whether he will now make a further statement on the trade discussions with the Spanish delegation.

Mr. Bottomley: asked the President of the Board of Trade if he will make a statement on the Anglo-Spanish trade negotiations.

Mr. Anthony Greenwood: asked the President of the Board of Trade whether he will make a statement on the outcome of the recent Anglo-Spanish trade conversations.

Mr. Mackeson: Both delegations are at present reporting to their Governments, and I regret that I am not in a position at this stage to make a statement.

Mr. Jeger: In view of the widespread interest in the negotiations taking place on the question of discrimination against British goods entering Spain, does the hon. Gentleman not think that it may be advisable to issue a White Paper as soon as the negotiations have been concluded?

Mr. Mackeson: I will consider that. I can give the hon. Gentleman this assurance, that the Spanish delegation are well aware of the dissatisfaction on this point of Her Majesty's Government.

Mr. Bottomley: In view of the very unfair discrimination against British goods by the Spanish authorities, would the hon. Gentleman not consider banning imports of oranges from Spain and consider recommending to the Chancellor of the Exchequer that he should reduce the tourist allowance for visitors to that country? [HON. MEMBERS: "Oh."]

Mr. Mackeson: As the right hon. Gentleman knows, we have of course sanctions, but we also have considerable imports from Spain, and I should not like at this stage to use any words that might further exacerbate the position.

Scotland (Minister's Visit)

Mr. Hamilton: asked the President of the Board of Trade whether he will include in his visit to Scotland in August the developing mining area of Fife to discuss with local representatives the need for industrial diversification within the county.

Major Anstruther-Gray: asked the President of the Board of Trade whether his visit to Scotland in August will include meetings with trade and industry on both sides of the Firth of Forth.

Mr. H. Strauss: My right hon. Friend will spend a day in Angus and Fife and a day in Edinburgh at the end of his visit to Scotland, and will meet the Dundee Chamber of Commerce and the Edinburgh Chamber of Commerce and Manufactures. He will also, earlier in his visit, meet members of the Executive Committee of the Scottish Council and of the Scottish Board for Industry for discussions on the general question of Scottish industrial development.

Mr. Hamilton: While thanking the hon. and learned Gentleman for that reply, may I ask him if he is aware that the Government have rejected the proposition put forward in the Cairncross Report on the grounds that their present policy of developing this area is attractive enough to deal with the developing mining area, and will he give an assurance that the President of the Board of Trade is not simply going to this area to please the local inhabitants without doing anything positive after he has met the local inhabitants?

Mr. Strauss: I do not want to travel outside the general subject of these two Questions, but all questions of interest to my right hon. Friend's Department will no doubt be raised during his visit.

Major Anstruther-Gray: Will the President of the Board of Trade specifically discuss the need for a road bridge over the Forth during his visit, and will he take the opportunity of travelling on the Queensberry Ferry so that he can experience the inconvenience and delay caused by those who have to use it?

Miss Herbison: Will the hon. and learned Gentleman convey to his Minister the need to include the National Coal Board, Scottish Division, in the visit he proposes to make, particularly in view of the great need to do something for Lanarkshire in the future?

Mr. Strauss: I feel sure that it is the universal desire of all Members that this visit should be as useful as possible. I think that neither the questions to be discussed nor the exact places to be visited can conveniently be dealt with by


Question and answer, but all the views expressed will be noted by my right hon. Friend.

Mr. Brooman-White: Is it not a fact that in a recent reply about the Cairncross Report it was intimated that the Government did not envisage any immediate change in the distribution of industry policy, and can we take it that during the present discussions he will consider the longer-term implications?

Mr. Strauss: The Cairncross Report really does not arise on either of these two Questions, and in fairness to other hon. Members who have Questions on the Order Paper, I think I should confine myself to the subject.

Mr. Hoy: Will the President of the Board of Trade, when he is in Edinburgh, give consideration to the question of trade at Leith Docks, which at present is being considered by his Department?

Mr. Strauss: I am sure that all relevant questions will be brought to the notice of my right hon. Friend and that he will have noted what has been said by the hon. Member.

Foreign Competition (Export Subsidies)

Mr. Russell: asked the President of the Board of Trade to what extent he has information that United Kingdom exports, especially to South America, are being handicapped by subsidised exports from foreign countries.

Mr. Mackeson: Certain foreign Governments have special incentives for their exporters which, in our view, act as export subsidies. These schemes are one of several factors contributing to the increased competition which our exporters are meeting in South American as in other markets, but their effect cannot be measured in isolation.

Mr. Russell: Can my hon. Friend say what steps he is taking to bring this up to the Committee which is responsible for running G.A.T.T.?

Mr. Mackeson: Yes, Sir. We are talking to individual Governments, raising the matter with the appropriate international institutions and, in particular, with the International Monetary Fund and with O.E.E.C.

Mr. Bottomley: Is the House to be informed of any success following the visit of the Joint Under-Secretary of State for Foreign Affairs? The Secretary for Overseas Trade will remember that I said that it was the job of the Joint Under-Secretary to report to us as well, if he had any information of any kind.

Mr. Mackeson: Perhaps the right hon. Gentleman will put down that question to the Foreign Secretary.

Mr. K. Thompson: Is the Minister aware that one of the most important subsidies for exports to other countries is extended credit, and that efforts on the part of British exporters to offer extended credit have been hampered to some extent by the increase in the rates charge by the E.C.G.D. covering these exports, and will he look into it?

Mr. Mackeson: I will gladly look into it, but I should like to see that supplementary question in writing.

Radio and Television Sets (Hire Purchase)

Mr. Rankin: asked the President of the Board of Trade whether, in view of the falling-off in the demand for television and radio sets, he will now consider excluding these items from the Hire Purchase and Credit Sales Agreements (Control) Order, 1952, or, alternatively, repeal the Order entirely.

Mr. H. Strauss: No, Sir.

Mr. Rankin: Does the Minister not realise that so far as these two particular items are concerned, the Credit Sales Agreement just does not mean a thing, and in view of that why should he deceive himself and the trade that it is having any effect whatsoever?

Mr. Strauss: If it does not mean a thing, I do not know why the hon. Member is so anxious for its repeal. The fact is that this Order must be considered as part of the Government's general economic and financial policy and not in isolation. The hon. Member and the House will remember that this industry has benefited by the recent reduction by 25 per cent. in the rate of Purchase Tax.

Mr. Rankin: Surely the Minister knows that the Order is being completely side-tracked by the system of rentals agreement which is in existence.

Mr. Strauss: I have explained to the hon. Member on many occasions the difference between a rental agreement and a hire purchase agreement, and I thought that he understood it.

Tobacco Pipes

Mr. Russell: asked the President of the Board of Trade the total quantity of tobacco pipes imported into the United Kingdom in the first five months of 1953; and what quantity came from Malta and other Commonwealth countries, respectively.

Mr. Mackeson: Imports of tobacco pipes during January to May, 1953, amounted to 8,440 gross of which 661 gross were sent from Malta and 83 gross from other Commonwealth countries.

Mr. Russell: Is my hon. Friend satisfied with these figures so far as Malta and the other Commonwealth countries are concerned?

Mr. Mackeson: That is really a question for the Maltese producers and the Commonwealth producers. They have a 20 per cent. preference.

Captain Ryder: Will the Minister bear in mind the special need to encourage industries of this kind in Malta, and can he say whether these imports are increasing or decreasing?

Mr. Mackeson: I cannot answer the latter part of the supplementary question, but it is very largely a matter for the producers. These countries naturally want to export here, but they have a preference and it is a generous one.

Merchandise Marks

Mr. Swingler: asked the President of the Board of Trade to what extent he has consulted with Commonwealth and foreign Governments on the subject of merchandise marks since he took office; and whether he will now initiate such discussions for the purpose of preventing the circulation of counterfeit goods.

Mr. H. Strauss: Two international agreements governing this matter are already in force and the need has been not for general discussion but for taking up individual cases of complaint. Since 1952 the Board of Trade have taken up about 330 such cases in 50 different countries.

Mr. Swingler: Has the Parliamentary Secretary read the recent report of our commercial attaché in Japan that Japanese commercial conditions are to some extent reviving the counterfeiting of British goods in Japan, with the assistance of foreign capital, and can he say what protest has been made about these cases by the President of the Board of Trade, and what action can be taken to put a stop to this malpractice?

Mr. Strauss: I should not like to answer that detailed Question without notice, but I would inform the hon. Member that of the 330 cases not more than 20 were from Japan, and that in the cases which we have brought to their notice the Japanese Government have not been unreasonable.

Nylon Stockings

Mrs. Mann: asked the President of the Board of Trade the reason for the reduction in our exports of fully-fashioned nylon stockings from £2,757,557 for the first five months of 1951 to £1,760,688 during a similar period this year.

Mr. H. Strauss: The chief reasons are the change from a sellers' market to a highly competitive buyers' market and import restrictions imposed in the countries of some of our best customers. The figures quoted by the hon. Member exclude goods sent by parcel post. The total figures for the first five months of this year, though lower than the corresponding figures for 1951, are 35 per cent. higher than last year.

Mrs. Mann: Is the hon. and learned Gentleman aware that I have here some figures from the Trade and Navigation Accounts, and I think that they are perfectly correct. Is he further aware that a greatly increased export trade could be had by British manufacturers if they manufactured the fish-net, non-ladder stocking which is much more durable wearing nylon stocking, and can he explain why they are not entering into that trade?

Mr. Strauss: I hope that the hon. Lady does not think that I am complaining about her figures. I was merely pointing out that she was not giving the total figures to which I referred in my answer. The manufacturers concerned are very eager to get as great


an export trade as possible, and I think that they must be assumed to know their own business and what goods will sell best.

Sir T. Moore: Do not those figures mean that more nylons are being made available and are being worn by the hon. Lady and her friends in the country?

Mr. Stokes: Has the hon. Gentleman any information to show how many pairs of these stockings go all the way to Gibraltar and come back again before they are sold?

Mr. Strauss: I certainly have not those figures now, but I will look into the point which the right hon. Gentleman has raised.

Mr. Assheton: Is it not the case that, although the quality of our yarn is just as good as that in America, we have not been allowed the dollars with which to buy suitable machinery? Are not many of our stocking manufacturers suffering as a result of that?

General Agreement on Tariffs and Trade

Mr. Beresford Craddock: asked the President of the Board of Trade whether, in view of the fact that the United States of America attaches to any trading concession given under the General Agreement on Tariffs and Trade a condition that such concessions may be withdrawn if damage to home industry is likely to be caused, Her Majesty's Government will assume power to take similar action in connection with existing or future preference margins within the Empire and Commonwealth.

Mr. Mackeson: The General Agreement on Tariffs and Trade already provides that all contracting parties—ourselves as well as the United States—may, subject to certain conditions, withdraw or modify negotiated tariff concessions in the event of serious injury to domestic producers.

Mr. Beswick: Is the Minister aware that special concessions in trade are now granted as between one State of the American Union and another? Why, then, should the United States Administration complain because similar concessions are granted as between one unit of the British Commonwealth and another?

Oral Answers to Questions — NATIONAL FINANCE

Planning Duties (Reorganisation)

Mr. Nabarro: asked the Chancellor of the Exchequer to give an assurance that no successor is to be appointed to the office shortly to be relinquished by Sir Edwin Plowden.

Mr. Gaitskell: asked the Chancellor of the Exchequer who will carry out the duties of the Chief Planning Officer after Sir Edwin Plowden's retirement.

The Chancellor of the Exchequer (Mr. R. A. Butler): I would invite the hon. and right hon. Gentlemen's attention to the official statement published on 30th June, of which I am sending them a copy. This explains the reorganisation in the Treasury which will take place at the time of Sir Edwin Plowden's retirement.

Mr. Nabarro: Can my right hon. Friend clarify that statement by saying whether the senior civil servant who will now assume the responsibilities formerly held by Sir Edwin Plowden represents a new appointment, or a replacement appointment, or whether there will be a reduction of £6,500, the amount of Sir Edwin's former salary, in the charge against the public purse?

Mr. Butler: I cannot give an exact answer to the latter part of the supplementary question. The fact is that the post of Chief Planning Officer will be lapsing. That does not mean that the new plan will be any less effective than the old one. The House will note that, by the introduction of the Chief Economic Adviser to the Government into the Treasury and by the assumption of duties by the Deputy-Secretary of the Treasury, the duties will be very well carried out. I should like to pay a tribute to the work done by Sir Edwin Plowden over these years. His efficiency and service to more than one Government have been beyond praise.

Mr. Gaitskell: Is the right hon. Gentleman aware that hon. Members on this side of the House would wish to associate themselves with the tribute which he has paid to Sir Edwin Plowden, who served his country faithfully under different Governments over a number of years? Might I, however, also ask him whether the official statement, which I have already


read, indicates that Sir Bernard Gilbert, as Deputy-Chief of the Treasury, will perform the duties hitherto performed by Sir Edwin Plowden and that the change is only a change in name?

Mr. Butler: The duties of Sir Bernard Gilbert will be somewhat wider because he will be the Deputy-Secretary to the Permanent Secretary to the Treasury, but he will subsume the duties performed by Sir Edwin Plowden and will be aided by a Third Secretary in charge of that section of the Treasury, which will remain to perform the duties which it has performed.

Mr. Gaitskell: May we take it that the planning section of the Treasury comes under Sir Bernard Gilbert but that he is also responsible for co-ordinating the whole of the financial and economic policy?

Mr. Butler: That is right.

Mr. Ellis Smith: Did the Chancellor see the glowing tribute paid to Sir Edwin Plowden by the "Financial Times," and is he aware that in the opinion of many of us Sir Edwin Plowden was largely responsible for preventing real planning during the term of the Labour Government?

Mr. Stokes: For the enlightenment of those of us who understand only plain English, what does "subsume" mean?

Mr. Butler: It can be replaced by two English words, "take over."

Letters (Customs Examination)

Mr. M. Lindsay: asked the Chancellor of the Exchequer in what circumstances a letter to a visitor in the United Kingdom from his daughter in Canada, the envelope of which has been sent to him, was opened by Her Majesty's Customs.

Mr. R. A. Butler: Letters in the incoming mails are liable to examination as a check that the contents do not include sterling banknotes or other prohibited imports.

Mr. Lindsay: Is my right hon. Friend aware that the man to whom this letter was addressed has for many years been one of the biggest purchasers of Lancashire's textiles and that to have one's private letters opened in times of peace is

extremely offensive and gives the impression of secret police? Will he reconsider whether it is really necessary that letters should be opened unless they are addressed to an individual who there is good reason to think may be engaged in illegal activities?

Mr. Butler: Power has been given by the House under the Foreign Postal Packets (Customs) Warrant Act, 1948, to open letters. The difficulty, which has been experienced before by hon. Members, is that it is impossible to differentiate between one letter and another. Experience has shown, unfortunately, that the power is needed because on occasion things are found which should not be found in letters, and, therefore, I regret to say that I cannot go behind the powers which have been given by Parliament.

Post-War Credits

Mr. Gower: asked the Chancellor of the Exchequer what he estimates would be the cost to the Treasury of ensuring that the repayment of post-war credits shall not be postponed solely by the death of the holder prior to the age when he might obtain payment.

Mr. R. A. Butler: The cost would be about £17 million in the first year and £2 million a year thereafter.

Mr. Gower: In view of a widespread feeling of injustice about this aspect of the problem, will the Minister re-examine the possibility of doing something along the lines suggested in the Question.

Mr. Butler: There is clearly a grievance here, to which my hon. Friend has drawn the attention of the House on previous occasions.

Mrs. Braddock: Will the Chancellor say what are the administrative difficulties which prevent the Treasury paying postwar credits to next-of-kin on the date on which the person who owned them would have claimed them had he lived?

Mr. Butler: It is not so much an administrative difficulty as a policy decision not yet to make any such concession.

Mr. Awbery: As the right hon. Gentleman has already made arrangements to pay post-war credits to men at 65 and women at 60, surely it would cost him no


more to pay them to the next-of-kin at the date at which the deceased would have drawn them had he lived?

Mr. Butler: That is precisely something which would impose an extra charge. However, I am fully aware of the difficulty, which is the most striking of the several anomalies connected with postwar credits.

£ Sterling (Purchasing Power)

Sir W. Smithers: asked the Chancellor of the Exchequer the purchasing power of the £ at the latest available date taking June, 1948, 1949, 1950, 1951 and 1952 as 20s., respectively.

Mr. R. A. Butler: On the basis of the figure for May, 1953, in the Ministry of Labour Interim Index of Retail Prices, which is the only official price index available monthly, the answers are respectively 15s. 7d., 15s. 10d., 16s. 2d., 17s. 9d. and 19s. 7d.

Sir W. Smithers: Will the Chancellor warn the country and himself before it is too late that increases in taxes, rates and wages can result only in a vicious spiral and a further depreciation of the paper £, and that in a country which cannot be self-supporting they must increase our cost of production and impede or destroy our ability to export at world competitive prices, which we must do or starve?

Mr. Butler: I accept the personal warning from my hon. Friend. With regard to the national impact, I hope attention will be paid to my hon. Friend's words.

Mr. Bottomley: Would the right hon. Gentleman agree that a £ worth 20s. in October, 1951, is today worth only 18s. 7d.?

Mr. Butler: I do not think things are quite as simple as that. If the right hon. Gentleman will study this Question and then put down a further Question to me, we may get it straight.

Overseas Travel Allowance (Excess British Currency)

Mr. Gough: asked the Chancellor of the Exchequer if he will consider amending the existing currency regulation under which a traveller who, at the

outset of his journey, innocently declares himself to be in possession of currency notes to the value of more than £5 suffers the confiscation of such moneys, and if he will reconsider the limits allowable in respect of currency notes where a traveller is going direct to another country within the sterling area.

Mr. R. A. Butler: In answer to the first part of the Question, the law provides for the seizure of excess notes, but the traveller can apply subsequently for their restoration and this will depend upon the circumstances of the individual case. In answer to the second part, I do not think that any change is called for, particularly since there are very few direct routes which do not call at outside ports on the way.

Mr. Gough: Is my right hon. Friend aware that the first part of the answer will give general satisfaction because it is generally accepted that there is no redress against such seizures? Would he consider innocent cases—and there are many innocent cases—and extend to them the more simple procedure of the person concerned sending the excess notes to some person by registered post?

Mr. Butler: I am informed that there are agencies, banks and other offices on the way to the port of exit which can be used by the passenger to deposit extra notes which should not be taken abroad. I recommend that course in the first case. I have examined the circumstances very carefully, and certainly in the case of extra money being taken to the Sterling Area every effort is being made to restore the notes seized.

Sir R. Boothby: Does my right hon. Friend not think—and there have been cases in this connection—that if a £ is voluntarily handed to the Customs by a traveller, presumably for safe keeping, and it is subsequently confiscated by the Customs authorities, it really amounts to a form of thieving by the Customs?

Mr. Butler: I have examined the practice, and it is really wiser for travellers to read the directions given to them before they travel, or at least to deposit their notes with one of the agencies or banks available. Even if they do not do that, the Customs' officers try to interpret their duties in as human a manner as possible.

Mr. R. Bell: Does my right hon. Friend realise that in every case where currency is voluntarily declared the operation must be innocent, and that nearly every country in Europe does operate a deposit and return system?

Mr. Butler: I have studied some of the foreign practices. I do not think there are many Customs and Excise systems better than ours, but I am always ready to listen to any point of view put by an hon. Member.

European Financial Discussions

Mr. Gaitskell: asked the Chancellor of the Exchequer whether he will make a statement on the purpose and outcome of the financial discussions which have recently taken place in London with Germany, Holland, Switzerland and other European countries.

Mr. R. A. Butler: The main purpose of these discussions was to exchange views on the questions of freer trade and currencies raised in the statements made by my right hon. Friend the Foreign Secretary and myself at the Council of O.E.E.C. on 23rd March. The discussions were purely exploratory and without commitment. Further studies will now take place in O.E.E.C. in accordance with the Council decision to which I referred in my reply to the right hon. Gentleman on 1st April.

Mr. Gaitskell: Did the discussions cover the question of particular countries which are surplus in the European Payments Union coming into balance again and the deficit countries equally achieving a balance?

Mr. Butler: That particular question, of course, was discussed at our meeting at O.E.E.C., where it was more relevant. But as far as I can remember almost every aspect of this type of question was raised at the recent discussions and I do not doubt that the question raised by the right hon. Gentleman came up for consideration.

Members' Salaries and Expenses

Mr. Lewis: asked the Chancellor of the Exchequer (1) if he has considered a letter from the hon. Member for West Ham, North; and whether he will make a statement in connection with the points contained in this

letter regarding the salaries and expenses of Members of Parliament;
(2) if he is aware of the concern felt by Members of Parliament at the way in which their Parliamentary allowance has been reduced by virtue of the continuing rise in the cost of living, the rise in the cost of articles and services that they have, of necessity, to provide out of this allowance; and whether he will agree to meet a deputation of Members to discuss these matters;
(3) if he is aware that Members of Parliament are the only section of the population that have not had any increase in their salaries since 1946; that no other section of the State servants have to meet the cost of their expenses of postage, travel, stationery, living away from home, from their salaries; and what is the reason for this discrepancy in treatment as between Members of Parliament and other civil servants.

Mr. R. A. Butler: I am aware of the concern felt by the hon. Member and others about the present salaries of hon. Members, but I regret that I am not at present in a position to make a statement.

Mr. Lewis: May I thank the right hon. Gentleman for what I know to be a sympathetic understanding of the position, and can I ask him sympathetically to consider this matter on the merits of the case and not from what some people outside may say about anything affecting the situation?

Mr. Butler: Thanks to much of the material sent to me by the hon. Member himself and the representations which I have had from the other side of the House, as has my right hon. Friend the Prime Minister and my right hon. Friend the Leader of the House, there is little danger that this subject will be considered without fully realising the merits of the case, including the situation in other legislatures.

Mr. Marlowe: Is my right hon. Friend aware that the hon. Gentleman who proposed this Question is asking for an increase in a rate which was fixed in 1946 and is strongly opposing any increase in salaries for High Court Judges which were fixed in 1831?

Mr. Shinwell: Will the right hon. Gentleman not allow himself to be deterred from doing what is reasonable


because of any risk of unpopularity and, if there is any to be incurred, surely we should be prepared to take that risk in order to do what is reasonable?

Mr. Butler: I think the right hon. Gentleman may be well satisfied that that is the general spirit animating the approach of Her Majesty's Government to this and every subject.

Mr. Gower: Is my right hon. Friend aware that if the salaries of Members of this House are increased commensurate with the American salaries no one will be available for high positions in industry?

Mr. Lewis: Is the Chancellor aware that judges do not have to meet the cost of their postage, stationery, living away from home, travelling expenses and other expenses which a Member of Parliament does have to meet?

Mr. Butler: The strange part is that most people who approach me have the same thought, that their own cases are worse than anybody else's.

Oral Answers to Questions — LOCAL GOVERNMENT

Greenhouses, Barry

Mr. Gower: asked the Minister of Housing and Local Government if he will now authorise the Barry Borough Council to proceed with the erection of new greenhouses and ancillary buildings for reasons stated in correspondence from the hon. Member for Barry.

The Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Ernest Marples): My right hon. Friend is prepared to authorise work to the value of £8,000.

Mr. Gower: Is the Minister aware that the Barry Council will be very pleased that the Minister has found it possible and proper to review his earlier decision?

Derating

Mr. Hargreaves: asked the Minister of Housing and Local Government if he is aware that the city of Carlisle is losing £42,000 in rate income, representing a rate of 1s. 6d. in the £, through the partial derating of industrial hereditaments; and what reply has been given to the

views expressed to him by the Association of Municipal Corporations supporting the setting up of a committee of inquiry to consider and report upon the full implications of Section 68 of the Local Government Act, 1929.

Mr. Marples: Derating naturally caused a loss of rate income to local authorities; but equalisation grant assists in so far as the local resources are, for this or any other reason, below the average; and Carlisle benefits under these arrangements. The views of the Association of Municipal Corporations have been noted.

Mr. Hargreaves: Will the hon. Gentleman inform the House what are the views of the Minister upon the proposal that has been made for an investigation into the effects of the Derating Act?

Mr. Marples: My right hon. Friend has appointed a Committee, which has just reported on the equalisation grants, and they have recommended what is in their opinion a fairer distribution of the Exchequer money than has formerly been the case. Derating did not come within their terms of reference, but I understand that the party opposite have come out categorically against derating for both industrial and agricultural purposes. I am not sure whether that is the unanimous view of the party opposite.

Mr. Lewis: Is the Minister aware that, even taking into account the advantages of the Equalisation Grant, many of the poorer boroughs, particularly those that were blitzed such as West Ham, find that they are far worse off with the Derating Act in operation, and will he not try to do something if only to help those poorer boroughs?

Mr. Marples: The West Ham Corporation, amongst others, received a block grant, to which the hon. Gentleman did not refer in his supplementary question.

Exchequer Equalisation Grants

Mr. Blenkinsop: asked the Minister of Housing and Local Government whether he will make a statement on the report of the Inter-Departmental Committee on the operation of the Exchequer Equalisation Grants.

Mr. Marples: The report of the Committee has been published so as to enable all concerned to give the fullest consideration to the proposed changes. In due course my right hon. Friend will consult the associations of local authorities and lay a White Paper reporting the results of this investigation of the operation of the grants.

Mr. Blenkinsop: Is the hon. Gentleman aware that in their Report this Committee do nothing to help the serious situation of an authority like Newcastle-upon-Tyne, which receives no grant and is in a serious condition because of the derating position, and will he receive representations from that city?

Mr. Marples: But the House will forgive my right hon. Friend if he did not give full weight to the considered and expressed views of the Association of Local Authorities, which will not be available until late September or early October.

Mr. Paget: Is the Minister aware that the Association of Local Authorities consists of a majority of authorities who receive the grant and is not really representative of the authorities who do not receive the grant?

Mr. Marples: But the authorities who do not receive the grant are represented in the Association of Local Authorities as well as those who receive the grant.

Oral Answers to Questions — SYNTHETIC DETERGENTS (COMMITTEE OF INVESTIGATION)

Mr. Gower: asked the Minister of Housing and Local Government what steps he will take to deal with problems arising from the chemical reactions and other effects of detergents upon sewers and rivers and upon freshwater fish.

Mr. Marples: I would refer my hon. Friend to my right hon. Friend's announcement on 18th May last of the appointment of a Committee to examine this whole question.

Mr. Gower: Is my hon. Friend aware that in some parts of the country this is really an urgent matter, and will he see that the inquiry is speeded up?

Mr. Marples: Yes, Sir. The inquiry is being carried out by experts and it is a

complex matter, but a conclusion will be reached as quickly as possible.

Mr. Awbery: Is the Minister aware that during the last fortnight medical officers of health have reported the effect on rivers, which has prevented children from swimming and, because of that, will he hurry up this inquiry?

Mr. Marples: It is going forward as quickly as possible.

Oral Answers to Questions — ATMOSPHERIC POLLUTION

Mr. Nabarro: asked the Minister of Housing and Local Government whether he is yet in a position to announce the names of the Committee to be established by his Department for investigating problems arising from smoke pollution of the atmosphere; and what special representation is being arranged for Scotland.

Mr. Marples: No, but my right hon. Friend hopes to do so shortly. He is in close touch with his right hon. Friend the Secretary of State for Scotland.

Mr. Noel-Baker: Will the terms of reference of this Committee include a request for a report on all measures necessary to ensure that local authorities and all householders will install efficient solid-fuel appliances which consume all the fuel and prevent smoke?

Mr. Marples: I should like notice of that.

Mr. Hastings: Will the Minister consider pollution not only by smoke but by noxious gases, the result of a combination of coal and other fuels?

Mr. Marples: I shall convey that to my right hon. Friend.

Oral Answers to Questions — HOUSING ACT (IMPROVEMENT GRANTS)

Mr. Skeffington: asked the Minister of Housing and Local Government whether, in view of the Government's proposals in connection with leasehold property, he will consider taking steps to amend Section 20 (3) C of the Housing Act, 1949, in respect of improvement grants.

Mr. Marples: My right hon. Friend is making a general review of the operation


of these grants under the Housing Act, 1949, and he would be happy to consider any suggestion which the hon. Member thinks would increase their usefulness.

Oral Answers to Questions — EVEREST EXPEDITION (AWARDS)

Sir I. Fraser: asked the Prime Minister if he will consider recommending the striking of an Everest Expedition Medal similar to the Polar Medal.

Mr. R. A. Butler: No, Sir. There is no such present intention. The House will be aware of the awards made by Her Majesty The Queen to members of the recent Everest Expedition.

Sir I. Fraser: Will my hon. Friend realise the usefulness of this suggestion as a means of rewarding all ranks who have taken part in this magnificent expedition, and is he aware that by an extraordinary coincidence, of which I have only just learned, the two hon. Members sitting one on each side of me—the hon. Member for Solihull (Mr. M. Lindsay) and the hon. and gallant Member for Merton and Morden (Captain Ryder) happen to have the Polar Medal?

Mr. Butler: I am gratified to hear that the two hon. Members concerned have the Polar Medal. I trust that they will stick to their Parliamentary duties and not become involved in further travel at present in those regions. Coming to the serious point made by the hon. Member, Her Majesty's Government fully realise the importance of this Question. The difficulty is that no medal is given for exploration in other areas, and no medal is given for particularly difficult mountaineering. There are really, therefore, serious difficulties in the face of deciding upon a medal for this particular and gallant expedition.

Sir I. Fraser: But is there really any distinction between gallantry and service to exploration in going to the Pole or going to Everest?

Sir J. Lucas: Is not Everest just as cold as the North Pole?

Mr. Butler: It is true that there have been for some time medals for most of the members of successful exploring teams within certain well-defined limits of the Polar regions, but there have not been

medals for other mountaineering expeditions besides Everest, nor have there been medals for exploration in, for example. Africa. Therefore it raises very wide questions.

Mr. Noel-Baker: Will the Chancellor consider that Everest is unique, and that the proposal of the hon. Gentleman would have widespread support I believe in many parts of this country?

Oral Answers to Questions — RESERVOIR, CHINGFORD (BLACK FLIES)

Mr. Finlay: asked the Minister of Housing and Local Government if he is aware of a nuisance caused by black flies breeding in the area of the Metropolitan Water Board's William Girling Reservoir, to the local inhabitants at Waltham Way, Chingford; and whether he will make a statement.

Mr. Marples: I understand that the Water Board are trying to find a way of getting rid of those flies. They have cut the grass and sprayed insecticide around the reservoir site but these are not complete remedies and investigation is continuing. I am advised that this particular species of fly does not constitute a danger to health.

Mr. Finlay: Is my hon. Friend aware that this species of fly, whatever he thinks about it, constitutes a considerable nuisance to the unfortunate inhabitants concerned? Is he also aware that the unfortunate inhabitants of Staines have been suffering under similar incursions for some years, and will he do everything he can to develop research to stamp out these kinds of unpleasant pests?

Mr. Marples: I am aware that they are annoying because I have been to Staines and have been subjected to the indignity of having these flies around my head, but the official and technical advice which I have received is that they do not bite or sting, nor do they feed or alight on food or refuse; they just hatch in the water, mate, and then they die.

Oral Answers to Questions — MINISTRY OF WORKS

School Building (Materials)

Mr. Short: asked the Minister of Works what steps he proposes to take to make more material and labour available for school building.

The Minister of Works (Sir David Eccles): My responsibility is to keep the Government informed of the probable supplies of building materials and to do what I can to encourage further expansion of output. At the present time materials are adequate for the school building programme, and the general supply of all materials is expanding.

Mr. Short: Does not the recent Report of the Select Committee reveal that the supply devoted to school building is inadequate, and does the Minister not agree that, if we are to remove these blots from our educational system, a considerably bigger share of our resources of manpower and materials will have to be devoted to this purpose?

Sir D. Eccles: I am only concerned with the programme as it is, and I have had no complaints that there are shortages of materials for the programme.

Palace of Westminster (Cafeteria Ventilation)

Mr. Fenner Brockway: asked the Minister of Works what steps can be taken to improve ventilation on hot days in the cafeteria adjoining the Terrace of the House of Commons.

Mr. Beswick: asked the Minister of Works if he is aware that the inadequate ventilation of the Terrace Level cafeteria presents an inconvenience to visitors using it and a hardship for the staff working in it; and if he will have the ventilation improved.

The Parliamentary Secretary to the Ministry of Works (Mr. Hugh Molson): Substantial improvement in the ventilation of the cafeteria was made early this year by installing four Ventaxia fans which both induce and expel air. The Chairman of the Kitchen Committee, at whose request the work was done, has expressed his appreciation of the improvement. It will not, however, be possible to make the ventilation entirely satisfactory until a completely new system can be installed, and money cannot at present be provided for this.

Mr. Brockway: Is the hon Gentleman aware that both visitors to this Assembly who use that cafeteria and the staff who work in a very limited space behind the heating apparatus would greatly appreciate some improvement of the ventilation there, and will he look at this matter again?

Mr. Molson: A general system of extract ventilation, both for the cafeteria and also for the Strangers' Bar, will be installed as soon as it is possible to find the necessary money.

Mr. Beswick: But could not the Parliamentary Secretary do something in the meantime? Since the improvement was made, certain other heating arrangements have been put in at the back there and the position is really below the standard which ought to obtain in this Palace?

Mr. Molson: I will see if it is possible to do anything more in the way of fitting additional fans.

Mr. Shinwell: Ask the Chancellor of the Exchequer.

Coronation Ceremony (Films)

Mr. G. R. Strauss: asked the Minister of Works what financial arrangements were made with the two companies that were given concessions to film the Coronation ceremony.

Sir D. Eccles: The Earl Marshal granted facilities to three companies to make colour films of the Coronation ceremony. He also granted facilities for a black and white film record which was pooled by the five main newsreel companies. My Department will recover from the film companies the cost of all work carried out on their behalf. This will include the cost of building camera boxes in Westminster Abbey and the cost of providing the extra lighting required for colour filming.

Mr. Strauss: But might I ask the Minister of Works this question: As in those films no payment was made by the companies for actors, sets or script writers, and they were bound to be exceedingly profitable, and as I understand one company has sent out a thousand copies, surely it would be reasonable to ask that the companies should pay, either to the Government or to the Westminster Abbey Restoration Fund, some considerable part of the profits they make?

Sir D. Eccles: Our chief concern was to see that the film was the best possible film, and to my knowledge those companies invested large sums in the preparations for the film. If there is a profit


made, my right hon. Friend the Chancellor of the Exchequer will get a good slice of it.

Mr. Gaitskell: While recognising the excellent quality of the films made of the Coronation, may I ask the right hon. Gentleman whether the Treasury were consulted before this arrangement was made?

Sir D. Eccles: I am not sure of the answer to that, but I know that it was difficult to select only a small number of the companies who asked to make the film, since the space in the Abbey was not sufficient to give a camera box to everybody. It would have been difficult to put this sort of thing out to tender.

Mr. Strauss: Surely the capital invested was tiny compared to the investment involved in the making of any ordinary film. In view of the fact that it was almost inevitable that there should be substantial profits from this film, it would have been reasonable to ask the companies, who were selected, to agree to some profit-sharing basis with the Government, or particularly, as I suggest, to pay some part of their profits to Westminster Abbey to help its restoration fund.

Sir D. Eccles: I think that the Earl Marshal was right in what he did. He had to make these arrangements very early, and so far as I know it is not the custom of the Government to ask for cash payments down for the film rights of religious ceremonies.

Mr. Gaitskell: Would the right hon. Gentleman consider approaching the film companies concerned and asking them whether they would not care to adopt the suggestion by my right hon. Friend that at least a proportion of these profits should go to the Westminster Abbey Fund?

Sir D. Eccles: I will take note of the right hon. Gentleman's suggestion and look into it.

Mr. J. Hudson: Most unbusinesslike.

SCOTLAND (EXCHEQUER EQUALISATION GRANT)

The Secretary of State for Scotland (Mr. James Stuart): With your permission, Mr. Speaker, and that of the House, I should like to make a statement about

the investigation into the working of the Exchequer Equalisation Grant in Scotland which has recently been going on.
A Committee consisting of representatives of the three associations of local authorities and of my own Department have been examining the whole matter. They submitted an interim report in January which demonstrated that the addition of 25 per cent. which is at present made to the English standard rateable value for the purpose of calculating the grant to Scottish local authorities, is unfair to Scotland. The Committee concluded that as for the time being no precise arithmetical measure can be found of the difference between the levels of the rateable value in the two countries, the total grant to Scottish local authorities should, as an interim measure, amount to the Goschen equivalent of 11/ 80ths of the grant payable in any particular year to local authorities in England and Wales. On the basis of the 1951–52 figures, this would increase the total grant payable to Scottish local authorities by about £1·7 million a year.
The Government intend to propose early legislation providing as an interim measure for an alteration in the basis of the grant on these lines. I understand that the investigating committee will submit a final report on other aspects of their inquiry almost immediately.

Mr. Woodburn: Is the right hon. Gentleman aware that local authorities in Scotland will welcome this step as an interim settlement of this difficulty? Is he also aware, however, that very considerable anomalies are outstanding as between town and town, not only in Scotland but in Scotland and England together? Will the Committee in their further report be dealing with this problem? Is the Secretary of State aware that much of this difficulty has arisen because of the non-completion of the revaluation in England, but that this step will go some way to repair the disadvantages suffered by Scotland in that regard?

Mr. Stuart: I am very glad the right hon. Gentleman agrees that it will go some way to repair the disadvantages. As to the distribution of the sum, I am at present only in possession of an interim report of the Committee. Their further report will reach me, I believe,


shortly, and the method of distribution is a matter which will have to be settled thereafter.

Mr. Woodburn: Is the right hon. Gentleman aware, however, that apart altogether from the distribution of this amount, considerable unjustifiable anomalies have appeared both in England and Scotland and are relevant to each other? Will the right hon. Gentleman be looking into these anomalies?

Mr. Stuart: I agree that this is an interim settlement pending a final one. I must just say how grateful I am to my right hon. Friend the Chancellor of the Exchequer for his assistance in this matter.

Lieut.-Colonel Elliot: Is my right hon. Friend aware that the result of this successful expedition into the land of Goschen and the remedying of a manifest injustice will give lively satisfaction throughout Scotland? Furthermore, when my right hon. Friend is considering the allocation of this sum, would it be possible to use it, not simply in small packets, but towards some important objective, such as the remedying of the housing of Scotland, which is certainly one of the greatest defects in our whole economy?

Mr. Stuart: It will probably be agreed, Mr. Speaker, that I should not at this stage go into a debate on these important and complicated matters. I merely assure my right hon. Friend that I will bear these points in mind. I am grateful to him that he agrees that this action is a help to us.

Mr. McNeil: Would the Secretary of State not agree that as according to his statement and the Report of the Committee the sum of £1·7 million—I think it should be nearer £1·8 million—is to be applied to reduce the anomalies, it would be improper and contrary to the recommendations if any further strings were tied to it as the right hon. and gallant Member for Kelvingrove (Lieut.-Colonel Elliot) suggests?

Mr. Stuart: As I said, this is an interim arrangement and it will go some way to help us at the present time.

Lady Tweedsmuir: Can my right hon. Friend say how much this increase amounts to per head of the population?

Mr. Stuart: I am credibly informed that it amounts to approximately 6s. 7d. per head.

Mr. Pryde: Is the right hon. Gentleman aware that the situation in Scotland is deteriorating rapidly and that there is considerable dissatisfaction that the consideration of derating was not taken into account long ago?

Mr. Stuart: I am not responsible in every respect for the past, but I maintain that the £1·7 million is something to help us in the future.

Mr. Emrys Hughes: Is the Minister aware that the £1·7 million is really not enough, because the local authorities have had to pay an increased rate of interest and their interest burdens since the Government took office are far more than the £1·7 million?

Mr. Stuart: I think that the Goschen formula is the best that we can work on at present. It has stood the test of time for some years and I base myself on that.

Sir W. Darling: Will my right hon. Friend make it clear that this is not a piece of legislation which has been initiated by this Government but is a piece of legislation to remedy a serious blunder by the previous Government?

Mr. Rankin: Is the Secretary of State aware that the loss to Glasgow due to derating represents exactly the total amount of money which he proposes to distribute over all the rating areas?

Mr. Stuart: I was dealing not with derating, but with the question of the equalisation grant and this arrangement to better the position.

Mr. Paget: Is the right hon. Gentleman aware that this plundering across the border will cause grave indignation amongst English people who do not get any equalisation grant at all?

Mr. Stuart: I do not say that I object to plundering, but this is not plundering. It has been proved by the Committee that for once Scotland is being treated unfairly.

BUSINESS OF THE HOUSE

Ordered,
That the Finance Bill, as amended, may be considered immediately after the re-committal of the Bill and report thereof, notwithstanding the practice of the House as to the interval between the various stages of such a Bill.—[Mr. R. A. Butler.]

Orders of the Day — FINANCE BILL

Order for consideration, as amended, read.

3.40 p.m.

The Chancellor of the Exchequer (Mr. R. A. Butler): I beg to move,
That the Bill be recommitted to a Committee of the whole House in respect of the Amendments to Clause 19, page 18, lines 15, 21, 26, 28, 34 and 39; and page 19, line 16, standing on the Notice Paper in the name of the Chancellor of the Exchequer.
The reason I have moved this Motion is to fulfil an undertaking given by the Economic Secretary to the Treasury that certain Amendments would be made to Clause 19. It was discovered that these would involve a recommittal of the Bill. It is largely technical, but we are keeping in order by moving this Motion.

Question put, and agreed to.

Bill immediately considered in Committee.

[Sir CHARLES MACANDREW in the Chair]

Clause 19.—(UNREMITTABLE OVERSEAS PROFITS.)

The Chairman: It may be convenient to consider all the Amendments together, as they all deal with the same point.

The Economic Secretary to the Treasury (Mr. R. Maudling): I beg to move, in page 18, line 15, to leave out "if," and to insert "in so far as."
Between them, these Government Amendments meet the three points which I undertook to meet in the course of the Committee stage. The first point was made by some hon. Friends and hon. Members opposite that the Bill, as originally drafted, provided that where someone had income in a blocked currency for which there was a market through which the blocked currency could be transferred he would not be able to claim the benefit of the Clause and have his tax postponed. It was pointed out that this was unfair and the Government accepted that it was unfair. Consequently, in place of the existing provision, we are putting in the new paragraph (b) in line 21 in the place of the second of the conditions.
The position, therefore, is that the person will get the benefit of this Clause and postponement of tax deduction if the currency which he has earned is blocked overseas even though there is a market in which that blocked currency can be exchanged for sterling.
The other two points were made by the right hon. and learned Member for Neepsend (Sir F. Soskice). The first was that the Clause should make provision for a case in which the overseas income is not wholly but partially blocked and we have met that point by the first and third Amendments and the first part of the fourth Amendment. We have provided that where the income is only partially blocked the benefit to the taxpayer should only run to the extent to which the income is blocked.
The third point was also made by the right hon. and learned Member for Neepsend. It was that the taxpayer should not have the benefit of the Clause unless he could show that he had made reasonable efforts to get the money transferred into sterling. That point we have met by the second half of the fourth Amendment and the two Amendments preceding, which are consequential to it.
Of the seven Amendments the first six meet the three points we undertook to meet in Committee. The final Amendment, to page 19, line 16, is in a sense consequential. Subsection (5) deals with the position where a person has some overseas income which is blocked but chooses to pay tax on it notwithstanding the fact that it is blocked. We are providing that if the blocked income has a market in which it can be transferred at a discount, if the person chooses to pay tax he shall not pay it at the official exchange rate but at the rate current in the market in that blocked currency. On the whole, this is likely to be to the benefit of the taxpayer and will be consequential on the other changes we have introduced. I hope that the Committee will consider that in this group of Amendments we have met the undertakings we gave at an earlier stage.

Mr. Hugh Gaitskell: I am much obliged to the Government for meeting the points raised by my right hon. and learned Friend the Member for Neepsend (Sir F. Soskice). I certainly


think that the concessions improve the Clause.

Mr. F. J. Erroll: Those of us on this side of the Committee who also tabled Amendments, to which several hon. Members opposite added their names, are glad to see that these Amendments cover the points we raised.

3.45 p.m.

Mr. Charles Williams: I wish to add my thanks to the Government. There have been a large number of cases in my constituency, sometimes of great hardship, and I welcome the change on which both sides of the Committee have combined to redress a grievance. I congratulate the Opposition on being on a good point for the first time for many years.

Amendment agreed to.

Further Amendments made: In page 18, line 21, leave out from beginning, to end of line 23, and insert:
(b) he has not realised the overseas income outside that territory for a consideration in sterling or a consideration in some other currency which he is not prevented from transferring to the United Kingdom.

In line 26, leave out "after having given," and insert "gives."

In line 28, leave out from "subsection," to end of line 30, and insert:
then, in the first instance, account shall not be taken of the overseas income to the extent to which he shows to the satisfaction of the Commissioners of Inland Revenue that the following conditions are satisfied with respect to it, that is to say—

(a) that it is unremittable; and
(b) that paragraph (a) of the foregoing subsection would continue to apply notwithstanding any reasonable endeavours on his part."

In line 34, leave out "it is unremittable," and insert:
the said conditions are satisfied.

In line 39, leave out "it ceases to be unremittable," and insert:
the said conditions cease to be satisfied with respect to it.

In page 19, line 16, after "determined," insert:
by reference to the generally recognised market value in the United Kingdom (if any) or, in the absence of any such value.

[Mr. Maudling.]

Clause, as amended, ordered to stand part of the Bill.

Bill, as amended, to be reported.

Bill reported, with Amendments; as amended (in Committee, and on recommittal), considered.

New Clause.—(MECHANICALLY - PROPELLED VEHICLES DUTY ON AGRICULTURAL TRACTORS CARRYING FITTED IMPLEMENTS.)

A vehicle falling within paragraph (a) of subsection (2) of section four of the Vehicles (Excise) Act, 1949 (which relates to ploughing engines, tractors and other agricultural engines), shall not be chargeable with duty under section five of that Act as a goods vehicle by reason of the fact that it is constructed or adapted for use and used for the conveyance of farming or forestry implements fittted thereto for operation while so fitted.—[Mr. Boyd-Carpenter.]

Brought up, and read the First time.

The Financial Secretary to the Treasury (Mr. John Boyd-Carpenter): I beg to move, "That the Clause be read a Second time."

This new Clause is designed to secure that an agricultural or forestry tractor does not lose the advantage of the low rate of tax appropriate to agricultural and forestry tractors by reason of the fact that it has mounted on it some form of agricultural implements. It has been pointed out by the National Farmers' Union and a number of hon. Members that there is an increasing custom of mounting some agricultural implement or other on a tractor and some doubt as to what is to be the result of a recent decision of magistrates on whether the mounting of such an implement upon a tractor had the effect of depriving the tractor of the low rate of duty. The Clause is designed to make quite clear that the tractor retains the low rate of duty appropriate to a tractor, whatever implement is mounted upon it.

I ought, at the same time, to say that the inter-connected problem of the transport box has so far defied satisfactory definition. I am very glad, however, that so far as the mounting of an agricultural implement on a tractor is concerned we have found what we believe to be a solution to the difficulty

Question put, and agreed to.

Clause read a Second time, and added to the Bill.

New Clause.—(IMPORT DUTIES ON CERTAIN SOUND-RECORDED MATERIAL.)

(1) Where duty is chargeable under Part I of the Import Duties Act, 1932, in respect of any goods being tapes, wires, discs or other articles which have been recorded with sound by any means, except—


(a) exposed cinematograph film; and
(b) goods appearing to the Commissioners to have been produced in quantity for general sale as so recorded,

and the amount of that duty would apart from this subsection exceed the amount which would be so chargeable if those goods had not been used for recording sound, the duty chargeable on those goods shall be charged only up to the last-mentioned amount.
(2) In heading (b) of sub-paragraph (iii) of the Table set out in paragraph 1 of the Third Schedule to the Finance Act, 1939 (which specifies the duty chargeable under Part I of the Import Duties Act, 1932, on exposed cinematograph film containing only a single sound track), the words "a single" shall be omitted; and heading (b) of sub-paragraph (iii) of paragraph (20) of Group XVIII in the Second Schedule to the Import Duties Consolidation) Order, 1949, shall be amended accordingly.
(3) The provisions of the Schedule (Duties on Exposed Cinematograph Film) to this Act shall have effect with respect to the duties which are chargeable on exposed cinematograph film in accordance with the said Third Schedule to the Finance Act, 1939, and the said Order of 1949.—[Mr. Boyd-Carpenter.]

Brought up, and read the First time.

Mr. Boyd-Carpenter: I beg to move, "That the Clause be read a Second time."
This new Clause, as hon. Members will appreciate, is somewhat more complicated in character than the one I have just moved. It is designed to deal with a difficulty which has arisen in the calculation of the import duty upon various forms of sound recording. Modern developments, particularly in connection with the 3D type of film, have involved the recording of sound not photographically, but magnetically, more usually, I understand, upon cellulose acetate, metallic tape or wire.
The particular difficulty which this Clause is designed to meet is that under the law as it stands at present the import duty payable is calculated on an ad valorem basis. It is, of course, a matter of extreme difficulty for the Customs, presented at the ports with a strip of sound recording material, to put any sensible value upon it. The difficulty is very similar to that which confronted us a few years ago in connection with

cinematograph film, and which was overcome in Section 3 of the Finance Act, 1939, by doing away with the ad valorem basis and imposing a specific duty of, I think, 5d. per foot of film. This is the solution proposed in another new Clause on the Order Paper in the name of the hon. Member for Islington, East (Mr. E. Fletcher). Both the hon. Member and the Government are endeavouring to tackle the same rather awkward problem.
Our proposal is upon a somewhat different basis, but what, in substance, it amounts to is that we propose to disregard the recorded sound and charge the duty simply on the material on which the recording is made. The ad valorem duty upon a sound track of, shall we say, 100 feet of cellulose acetate tape will be the duty payable on a plain strip of that material of the same size. The sound recording is disregarded and the duty is assessed solely on the material. That gets rid of the complication of valuation and I recommend it to the House as a satisfactory solution.
This is not a great matter. As hon. Members who are familiar with the industry will appreciate, the import tax upon films is very small in its incidence. I think that last year the yield was about £140,000. Of course, the protection to the home industry depends not on the tariff, but on the quota system. On the other hand, these new developments have caused considerable difficulty and we are trying to tackle them in this way. We are taking advantage of so doing to tackle the general problem of recorded sound which is covered by this new Clause, not only film sound tracks but other forms of recorded sound.
If I may be allowed to mention the new Schedule which goes with this Clause, one or two rather technical adjustments are made in the tariff law dealing both with cinematograph films in the strict sense, and those recorded magnetically to which the Clause mainly refers. This is a somewhat technical and perhaps unexciting proposal, but I suggest that not only does it facilitate the task of levying the duty but makes easier the task of the trade interests concerned, with whom discussions have taken place.

Mr. Eric Fletcher: I am obliged to the Financial Secretary for his explanation. He has indicated that this new Clause is designed to serve the


same purpose as a new Clause in my name and the names of my hon. Friends which was put down for the Committee stage but was not selected, and which appears again today on the Order Paper.
I entirely agree with what the Financial Secretary has said. It is very difficult to find the right form of words to deal with the new problems which have arisen. I am prepared to accept the view that the words devised by the Government are more apt than the words in my proposed new Clause. This is really a case of trying to make Parliamentary language catch up with the improvements in scientific technique and skill.
As the Financial Secretary has said, this problem arose over a very simple matter. Hitherto, the sound film, which is part of a film, has been produced by exposure to light. In the words of the Schedule under the Import Duty Act under which Customs Duties are levied, reference is made to "unexposed" and "exposed" film. Recently, owing to improvements in science, sound has been reproduced photographically on wire, on a strip or a belt. It is produced, not by exposure to light, but by exposure to magnetic attraction.
It became a matter for argument as to whether "exposed" film was the relevant term to describe film produced by exposure to a magnetic field, and I think there was legitimate room for argument between the industry and the tax commissioners. No doubt if this problem could have been foreseen when the Act was originally introduced a form of language would have been devised to cover it. What has been done is what we hoped would be done. A practical problem has been solved in the proper way, not by allowing the commissioners to make an interim administrative arrangement, but by introducing a Clause in the Finance Bill to deal specifically with the problem and put it right.

Question put, and agreed to.

Clause read a Second time, and added to the Bill.

New Clause.—(REBATE ON LIGHT HYDROCARBON OILS.)

On and after the first day of September, nineteen hundred and fifty-three, there shall be allowed from the duties of Customs and Excise a rebate of sixpence a gallon on light

hydrocarbon oils which are not used as fuel in mechanically-propelled vehicles constructed or adapted for use on roads.—[Mr. Erroll.]

Brought up, and read the First time.

Mr. Erroll: I beg to move, "That the Clause be read a Second time."

Mr. Speaker: I would point out that on a later page of the Order Paper there appears a proposed new Clause in the name of the hon. and gallant Member for Hull, Central (Captain Hewitson) and other hon. Members dealing with a rebate on white spirit, etc., for paint manufacture. Perhaps it would be convenient if the two Clauses were discussed together, although I did not propose to call the second one.

Mr. Erroll: This Clause deals with the rate of duty levied on light hydrocarbon oils used for purposes other than as fuel for vehicles constructed or adapted for use on roads. When the original duty was introduced it was for the purpose of taxing motor fuel by a simple, rough and ready definition, inserted in the appropriate Finance Bill and designed to tax all petroleum products of a certain sort which it was considered would be used exclusively by motor vehicles.
That was many years ago and since then, due to the technical progress of the industry and engineering developments throughout the country, not only have many additional and further uses been found for the class of hydrocarbon products known as motor spirit, but there have also grown up a number of additional light hydrocarbon oils falling within the definition of light hydrocarbon oils for the purpose of taxation.
4.0 p.m.
Those many uses which were never intended, expected or anticipated at the time of the passage of the original legislation now find themselves contributing substantial amounts in taxation for what was first intended as a means of raising money to improve the road system of Great Britain. It is because of these technical developments that the position is now anomalous.
The purpose of the new Clause is to seek a reduction in the rate of duty for those light hydrocarbon oils which are used for industrial and other purposes—that is to say, for purposes other than as fuel for vehicles on the roads. I should like to quote a few examples.


Specially important is the use of light hydrocarbon oil for industrial purposes as a solvent in rubber processing or in the manufacture of certain paints and varnishes. In both these cases the light hydrocarbon oil—white spirit—evaporates and is lost after use and, of course, the duty paid disappears with it at the same time.
The amount of taxation may not appear to be large but, nevertheless, it is an appreciable factor in the cost of manufacture. During the last Finance Bill of the late Labour Government a small Amendment was introduced whereby a drawback on the duty could be secured when an identifiable quantity of light hydrocarbon oil was exported as part of the export drive. The difficulty was only partially met because that did not take account of those light hydrocarbon oils used in the manufacture of articles and not themselves exported.
That, to some extent, accounts for why this drawback has not been greatly used by manufacturers. It is partly because it does not apply to all industrial uses of light hydrocarbon oil which are part of the export programme, but also because, since it only applies to those paints and solvents actually exported and not to the whole range of a company's manufactures, it has been found by some not to be worth the administrative cost of applying for only a proportion of the duty paid.
There are other industrial uses, the most popular of which is the dry cleaning industry, where light hydrocarbon oils known as white spirits are used for the dry cleaning of clothes and industrial garments. The evaporation of solvent is quite considerable in these cases and even where recovery plant has been installed only a proportion can be recovered. There is thus a substantial increase in the real cost of dry cleaning garments because of the very high rate of duty which light hydrocarbon oils now attract.
Then there is another serious increase in cost in the bench testing of engines. These may be engines ultimately for use on the road or they may be aero engines. Whatever their ultimate purpose the light hydrocarbon oil necessarily used as fuel during the testing of the engine is subject to duty at the full rate although the engine itself is not, of course, anywhere near the road.
On the farms, the position has become extremely serious. When petrol—that is to say, light hydrocarbon oil—is used on the farm it attracts duty at the full rate. A petrol driven tractor or a petrol driven engine on a farm uses duty paid fuel and the duty, now that it is much more than the cost of the fuel itself, is a serious element in the cost of production. Should the farmer use a paraffin powered tractor he will not have to pay any duty on the fuel because the paraffin is a medium hydrocarbon oil and does not attract duty.
The plain fact is that, were there no differential taxation on petrol as distinct from paraffin, no farmer would think of using a paraffin powered tractor because, on all counts, a petrol driven tractor is more efficient, more reliable and economical. Because the tax element in the fuel cost is so considerable most farmers are driven to use paraffin powered tractors which are less efficient. Here is a plain case of taxation engineering as a result of the taxation policy of successive Governments.
The position on the farms is rendered even more absurd by the fact that, if a farmer should use a diesel fuel tractor, although that diesel fuel will attract the full rate of duty if the tractor is used as a road vehicle, the farmer gets a rebate on the amount of tax when the fuel is used in a diesel tractor employed only on farm land or in a similar engine used for stationary purposes. For diesel fuel, which is not a light hydrocarbon oil, there is, in addition to the exemption for farm tractors, an exemption for diesel rail cars which are a form of transport; but if the diesel engine is used on the road the full amount of duty must be paid on the fuel.
Representations have been made frequently to successive Chancellors about this matter. Proposals have been put forward in the House from time to time ranging from complete exemption for non-road uses to part exemption. In the new Clause I suggest only a small differentiation of 6d. per gallon because to give a complete exemption would, I fear, cost the Treasury too much this year. But even a small reduction would be a most welcome sign from the Treasury to industry and agriculture that there was to be some preferential treatment.
In previous representations the reply has always been that administrative difficulties and the possibilities of evasion


would make it impossible to operate a system of rebates fairly. I submit that that is not really the case. It would be possible to operate a system of refunds and repayments. Such a system has already been submitted to the Chancellor for his consideration. After all, it is no uncommon event in taxation to find that one must first pay the tax in full and then apply for a rebate or refund afterwards.
It happens in the payment of company dividends. Tax is deducted at the full rate at source and it is up to the individual to claim back any reliefs to which he is entitled. The same might be said of various Income Tax allowances where the onus is on the individual to make the claim. With the system proposed in the representations which have been made the idea is that the consumer should pay the tax first and then, if he wishes, claim the rebate to which he would be entitled, making the full disclosure which might be required by the Customs and Excise authorities.
This is the system which has operated in a number of other countries where it is regarded as important to give some preferential rebate to industrial and agricultural users. What can be applied in other countries can surely be operated here, especially when we remember how important it is to keep down our export costs and not to inflate them needlessly by including as an item of production the taxation on a vital raw material, whether it be in the rubber making, the road haulage or the aviation industry.
I should like to point out, in passing, that in aviation the position is specially anomalous in that when light hydrocarbon oil—aviation spirit—is used to power the aircraft on an internal flight duty has to be paid at the full rate. A similar aircraft using a turbo-prop or jet engine, which only requires paraffin, which is a medium hydrocarbon oil, therefore does not pay any duty at all, so that there is a very distinct advantage, from the fuel point of view, in favour of the jet-powered aircraft. In any event, of course, an aircraft which is refuelling in this country for a destination outside Great Britain can get a drawback of the duty, because such fuel is not taxable, but, should it be an internal flight, the

aircraft would have to pay duty at the full rate.
This shows that a system of rebates can be applied to aircraft, as it is, in fact, being done already, and I should like to urge upon the Chancellor that we should like to see an energetic attempt being made by the Treasury to introduce a system of rebates which would give effect to the purpose of this new Clause. If it be said that the Treasury are too busy and overworked at present to undertake the necessary investigation, then, perhaps, the Chancellor would set up a committee of the type which he set up last year—like the Hutton Committee or that which reported upon the Purchase Tax uplift—to investigate the matter, hear all the evidence afresh and reach a conclusion which could be examined by this House next year.
It is in those terms that I submit the new Clause, because I do not wish, at this comparatively late stage of the Finance Bill, which has so far proceeded smoothly and successfully, to provoke a Division, if that can be avoided.

Mr. Norman Cole: I beg to second the Motion.
A number of firms in my constituency are very much affected by this matter, which, in the eyes of many people, may be a technical one. It is a matter which has been brought very much to my notice by a firm in my constituency which deals exclusively with rubber production. This firm is very seriously affected by the lack of a rebate of this duty. Their products are in competition with those brought into this country from Czechoslovakia and Hong Kong and other areas where rubber articles are produced. In fact, home sales in this country are in competition with such imports, and the home trade in any industry of this type offers very large support for the export trade. That is the first point to be borne in mind.
In addition, the exports of this particular firm, and others of a like nature, are also in competition with the rest of the world and with the products of those countries which I have mentioned, which do, in fact, allow a rebate of taxation on light hydrocarbon oils to firms producing in their countries. It seems to me that, if we are having to compete with other countries, the latent


skill and craft of the people in this country employed in making these products ought not to be so seriously handicapped.
This matter has been brought up in previous years to other Chancellors of the Exchequer, and some attempt has been made to get somewhere, but the fact remains that these industries—rubber producers and others which use these oils—pay 2s. 6d. duty on every gallon which they use in their manufacture. This is a very reasonable and very humble proposal which we are submitting in asking, for a start, for a rebate of at least 6d. per gallon.
I would ask the Financial Secretary or the Economic Secretary, whoever is to reply, whether, in recognition of the great effort which we are making and must make to keep our place in the markets of the world, they can make this gesture to this particular type of industry by allowing this rebate. It is true that it will not solve the whole problem, because there is much difference between 6d. and 2s. 6d., but it will, at least, be some indication that the Government are giving encouragement to industries of this nature.

4.15 p.m.

Captain M. Hewitson: I welcome the opportunity of supporting the hon. Member for Altrincham and Sale (Mr. Enroll), but I regret the statement in the closing part of his speech, that he would not press his new Clause to a Division. I should have thought that the difficulties we are facing today in building up our export markets are such that this House would have taken an opportunity, especially with a Clause of this description, to express its will that we should be encouraged in the task facing our industry in winning markets abroad.
The Chancellor never fails at any time to make approaches to the trade unions and ask them, first, to restrict their wage applications, because that can only have the effect of raising prices and the cost of living, and, secondly, to ask for every effort to be made by industry to boost our production. The trade union leaders of the country, over the last two years, have loyally supported the Chancellor in his efforts in this direction. They have soft pedalled and kept down wage demands to a minimum, and, further, they have used every means at their disposal

to lift production in all our industries throughout the country, and especially for the export market.
Here is an opportunity for the Minister to say that he can agree to this token concession of 6d. per gallon, because, after all, the duty on a gallon is 2s. 6d. The industry in which I am particularly interested, which is in my own constituency, is the paint manufacturing industry, and I should add that, outside London, Hull is the largest paint manufacturing area in this country. At present, in Hull, there is a great shadow of unemployment hanging over our city. Twenty per cent. of our fishing fleet is tied up and not going to sea, and we have a hard core of 5,000 unemployed in the city which we do not seem to be able to reduce. The shadow of unemployment which is hanging over our greatest manufacturing interest—the paint industry—has caused grave concern in Hull, where there is much support for any efforts aimed at bringing down manufacturing costs, to enable us to retain our export markets and keep our people in regular work.
I do not think this is too much to ask, because the new Clause which stands in my own name asks for twice the reduction which is sought in this one, and we should take into consideration the fact that the paint manufacturing industry uses 35 million gallons of light hydrocarbon oils and pays the Treasury something like £4 million per annum in taxation. Those are round figures, and I do not want the Financial Secretary to tell me that the bulk exporter of paint pays nothing in duty, because he can get a drawback. I am well aware of that. The paint on machines and materials that are exported is paying the full tax. I hope we shall be told that we can get some part of this tax returned. I am told of a motor firm who are exporting and who tried this scheme of drawbacks. The sum due to them was £23,000, but it cost them £30,000 to get the drawback, and after that they did not bother to claim it. This thing is really serious. We are fighting for markets where pence count.
I am given to understand that some of our commodities are exported in wooden packing cases and that the paint on the packing cases costs more than the commodity in the cases that we are exporting. That means that we have reached a ridiculous position. In some export markets


a difference of 1d. per article determines whether or not we get the contract. If we do not get the contract it means unemployment somewhere in this country.
In previous years I have been rather rude to the Chancellor of the Exchequer and his assistants on the Front Bench and I have possibly been a little threatening about what would happen in the workshops if they did not listen to reason. Today, I have lost all that. I am appealing to them because I do not like to see people out of work, knowing what it means to have years of that myself. I make an appeal to the Financial Secretary to have another look at this question.
Countries like Germany are coming into our markets and will leave us behind, because they are giving assistance to their industries. When I say "Germany" I mean the German Government. There are various ways of giving assistance, not only by direct subsidy but by such ways as relief of transport charges which brings down the cost of a commodity at the delivery point.
Something should be worked out. What can be done by assistance to industry in Germany and Italy can be done in this country. It is wrong in principle to tax the raw materials used in building up manufactures but that is what happens in this instance. I make my plea to the Treasury, and I shall give every support, even in the Division Lobby, to the hon. Member for Altrincham and Sale, if the Treasury will not grant a small little concession on this occasion.

Squadron Leader A. E. Cooper: I hope that the Financial Secretary to the Treasury will not turn a deaf ear to the pleas that have been made. During the years when we were in Opposition we put forward similar pleas, and they were supported by one or two hon. Members on the other side who felt as strongly on this subject as we. The hon. and gallant Member for Hull, Central (Captain Hewitson) put up a very strong case. The real strength of it was contained in his last few sentences, when he said that it was wrong in principle to tax raw material of industry. This is one of the only raw materials which is so treated.
Many years ago somebody at the Treasury decided that these oils had

some relation to petrol. That was the genesis of this tax. Every time that petrol has gone up, light hydrocarbon oils have gone up by half that amount. When petrol has been reduced, the oils have come down.

Mr. Douglas Jay: The "someone at the Treasury" to whom the hon. and gallant Member referred is the present Prime Minister.

Squadron Leader Cooper: The right hon. Member for Battersea, North (Mr. Jay), on an earlier occasion, said that the effect of the tax was something like 2d. or 3d. on the gallon of paint, but he was quite wrong. If we take white spirit formulations that may be the effect, but white spirit is used in synthetic resins, metallic paint driers and certain pigment formulations. All these have the effect of piling up the cost and making it more difficult for us to compete in the export market. There is considerable loss in manufacture due to the volatility of these things and the difficulties in getting a drawback on white spirit.
This affects not only the paint industry but the printing, linoleum and textile industries and many others. They add to our costs and make export competition difficult. I suppose that the answer will be that revenue will be lost to the Treasury. If that is so, we must look for other ways to recoup ourselves for the revenue which will be lost. It is wrong in principle to tax the raw material of industry.

Mr. Ralph Morley: I hope that whoever replies to the debate on the proposed new Clause, which was so ably moved by the hon. Member for Altrincham and Sale (Mr. Enroll) and supported by the hon. and gallant Member for Hull, Central (Captain Hewitson), will bear in mind that hydrocarbon oils are the raw material in a very large number of manufactured commodities, such as paint and rubber and that, therefore, a tax upon them is a tax upon industry. Any tax upon industry is bad but in this case it is very heavy and is equivalent to a tax of 150 per cent. more than the tax on jewellery and that on mink coats, which seems to have symbolic significance in political controversy on both sides of the Atlantic.
Hydrocarbon oils are used not only in the manufacture of rubber and paint but


in many commodities which are necessary to agricultural production. For example, it is used in the manufacture of the sprays which are used for the extermination of weeds. Therefore, this tax is not only a tax upon industry, but also a tax upon food production. There is no doubt that it affects our export trade because we are now in competition, in the export markets for rubber and paint, with a large number of other countries, and we have not the advantage of the sellers' market which we enjoyed a few years ago.
4.30 p.m.
Many countries either remit taxation altogether on light hydrocarbon oils if they are used for non-motive purposes or give a very considerable rebate of the tax if they are used for purposes of industry or agriculture. The United States of America and Canada both remit taxation altogether on light hydrocarbon oils which are used for non-motive purposes, and nearly all the major countries of Western Europe impose a discriminatory tax upon them so that if used for industrial or agricultural purposes they do not pay so high a tax as if used for other purposes.
This tax is a severe handicap to our manufacturers in competing with the manufacturers of those countries. I understand that at present the exporters of paint are suffering very considerable competition from Czechoslovakia, and that the exporters of rubber are experiencing similar considerable competition from Hong Kong, which would be lessened if this Clause were adopted.
It is a very modest Clause and would not entail a very large financial loss to the Treasury. Indeed, the financial loss incurred by the acceptance of the Clause might, perhaps, be more than compensated for by the additional foreign currency that would come to this country through the expansion of exports that would result. I hope, therefore, that the Economic Secretary will give the Clause his sympathetic consideration.
I also hope that the mover of the Motion, if he does not get a favourable answer, will take the matter to a Division. I imagine that there is a very strong majority feeling on both sides of the House that the Clause should be accepted. If the Economic Secretary does not accept

it, and if the hon. Member for Altrincham and Sale takes it to a Division—as, we hope, in that case he will—there will, of course, be a danger of the Government being defeated. But the defeat of the Government on a minor matter of this sort would not be serious, and all that would happen would be that, the House having decided in favour of the new Clause, the Chancellor would have to accept the decision of the House and give effect to it in the appropriate way.
In the first place, therefore, I hope that the Economic Secretary will look favourably on the Clause, and that, if he does not, the hon. Member for Altrincham and Sale will take his courage in both hands and divide the House upon it.

Mr. Frederic Harris: I hope that my hon. Friend the Economic Secretary will not put us into the difficult position which the hon. Member for Southampton, Itchen (Mr. Morley) has just described. Perhaps he will be able to make a concession. During the five years that I have been in this House, this matter has come up for discussion on each successive Finance Bill. I think that my hon. Friend the Member for Altrincham and Sale (Mr. Erroll), who moved this new Clause so ably this afternoon, has been trying for about eight years to get something done about it.
I must confess that I sometimes find it very difficult to understand why Governments do not face up to issues such as this which do not call for a great deal of consideration, or even concession. After all, this is a matter of a tax on a raw material used in manufacture. Reference has already (been made by hon. Members on both sides of the House to the fact that light hydrocarbon oils may very well be the only raw materials used in manufacture which are taxed at present, but, at 2s. 6d. a gallon, it is a very heavy tax.
Reference has also been made to specific industries affected. The hon. and gallant Member for Hull, Central (Captain Hewitson) specifically mentioned the paint industry. In my own constituency we have one of the largest firms of dyers and cleaners, who are very directly affected by this considerable burden in their manufacturing processes. In the last few years there has been only one concession in regard to exports. In that case, it could be defined and


allowances in the form of drawback were made.
It seems to me basically wrong that home manufacturers should have to operate under difficulties of this kind. When this tax was first put on it was, obviously, never intended that manufacturers should have to bear this additional burden. It would not be very difficult for the Government to meet us on this point. It is the general desire of all hon. Members who have spoken that a future Government should face up to the difficulties which now confront manufacturers. I sincerely hope that the case so ably put by my hon. Friend will result in a reasonable concession being granted to manufacturers who now have to carry this very excessive burden.

Mr. Maudling: As my hon. Friend the Member for Croydon, North (Mr. F. Harris) has pointed out, this is a subject which with slight variations has been discussed on a number of occasions in recent years and under different Governments, and the arguments both for and against the proposal have, therefore, been fairly often rehearsed and have a certain familiarity about them. I cannot claim that the arguments which I propose to lay before the House will present any particular novelty; nor are they likely to depart very far from the answers given by right hon. Gentlemen opposite in dealing with this problem when they sat on this side of the House.
I shall deal, first, with something which appears to have general currency. It is that when this tax was first introduced, in 1928, it was intended as a motor fuel tax for the purpose of improving the roads. That is not the case, and my right hon. Friend the present Prime Minister, who introduced the tax—as has been pointed out on more than one occasion by the right hon. Member for Battersea, North (Mr. Jay)—said at the time that, in the main, hydrocarbon oils were used for motor transport and for various industrial purposes. He made it quite clear that the duty was one on hydrocarbon oils and was not specifically intended as a road tax on motor fuel for the purpose of improving the roads.
The first difficulty that one encounters in considering this proposal is its cost to the Revenue. The amount being asked

for on this occasion is a rebate of 6d. a gallon, and I am informed that the cost of that reduction in a full year would be about £6 million, which is a very large sum indeed. As has been pointed out by one of my hon. Friends, if my right hon. Friend the Chancellor granted this rebate he would have to raise the money elsewhere.
As the hon. and gallant Member for Hull, Central (Captain Hewitson) pointed out, this 6d. rebate would be regarded as only a token concession. I am quite sure that hon. Members who have put this point to various Governments with such assiduity and vigour would not be satisfied with 6d. They would press for the complete abolition of the tax, which would cost £30 million a year. This would be a very large sum indeed.
The first objection to the proposal is, therefore, one of cost. The second objection, which has been put forward on many occasions, is that it would be very difficult indeed to administer a system of rebates and would require a very large number of additional Customs officials. Indeed, I am advised that it is considered that the number of officials needed to police a system of rebates of this kind would substantially exceed the total number of officials engaged at present in the collection of the whole duty which yields £290 million a year to the Exchequer. It would be a very large and difficult administrative problem.
It has been said—I think the hon. Member for Southampton, Itchen (Mr. Morley) and the hon. and gallant Member for Hull, Central mentioned it—that in other countries there are schemes for rebates of this kind. We have examined a number of these schemes which are operating in other countries, and we find that they prove conclusively the great administrative difficulty involved because they are all based on the keeping of very detailed and comprehensive records by an immense number of people and their regular inspection by a number of Customs officials. I am informed that a number of countries have found the difficulties so great that they have confined the rebates to large firms and refuse the rebates to small firms, which is a system which I am sure would not be acceptable to this House or to the country.
The other point which is sometimes made is that if a drawback is arranged


for exports there should be a drawback for the home market. I would emphasise that there is this drawback for exports, as the hon. and gallant Member for Hull, Central mentioned. It has been implied by a number of hon. Members that a continuation of this duty on the light hydrocardon oils used in manufacture places a heavy burden on exports, but, as I have said, there is a provision for drawback on exports. It does not apply in all cases, but there is this provision. It would not be easy to extend the drawback from the relatively simply question of exported goods containing a proportion of hydrocarbon oil—on which Customs officials are already in their normal duties engaged—to the immense number of home uses of light hydrocarbon oils, of which the outstanding example is the dry cleaning industry to which reference was made by my hon. Friend the Member for Croydon, North.

Mr. Jay: Before the hon. Gentleman leaves the question of the export rebate, which seems to me to be the most promising line of advance in dealing with this argument, can he tell us what steps have been taken to overcome the difficulties which have arisen?

Mr. Maudling: I have not the figures of the extent to which advantage has been taken of the drawback, but it would depend on the amount involved in the case of each article. I will give figures later to show that the amount involved in individual cases is so small that it would not be worth while for the manufacturer to reclaim it. Whether or not the export drawback scheme is satisfactory, its extension to the home market raises a much wider problem.
There is also the principle involved, that although, obviously, we wish to remove taxes which raise the price of exported goods, it is not by any means the same thing to remove a tax on goods sold in the home market, if it has to be replaced by a tax on something else sold in the home market. These taxes which fall on raw materials used in production are, broadly speaking, passed on to the consumer and are paid by the consumer. If they are not paid by the consumer of light hydrocarbon oils, they have to be paid by additional imposts placed on other articles, such as tobacco and alcohol.

4.45 p.m.

Mr. Douglas Houghton: Put it on the Income Tax.

Mr. Maudling: That is an agreeable speculation, but I do not think it would assist us in this debate. All indirect taxes fall on the consumer, and if there were no tax on light hydrocarbon oils there would have to be an additional tax on some other commodity.
Some hon. Members have made the distinction between light hydrocarbon oils used in manufacture and those used for road transport. I should have thought there was a large number of articles sold and exported, to transport which the cost of the petrol used was greater than the cost of the hydrocarbon oil which has gone into the paint with which the packing cases were painted. If there was an argument for giving a special rebate on the light hydrocarbon oil used in the paint, there would be an equally strong argument for removing the petrol duty on the petrol used by firms transporting the goods.
I think it would be a good thing to give one or two figures to show the extent of the problem. I have been provided with a number of figures showing the extent to which this tax affects various articles. Let me take, first of all, rubber gloves, which have been mentioned already. The effect of the tax varies from 7d. to a maximum of 3s. 4d. a dozen pairs. I believe that that is one of the highest examples. One the other hand, for each motor car tyre the figure is 1½d.
For proofed cloth the figure varies from 2s. 2d. on 100 square yards to a maximum on special sheeting of 31s. on 100 square yards. On tennis balls the figure is 10s. per 100 dozen, and on linoleum, of which we hear a good deal, it is 3s. 6d. to 18s. 6d. a ton. Therefore, it does not seem as though the addition to the cost of production resulting from the imposition of this duty is serious inmost cases compared with the general level of cost.

Mr. Ede: Can the hon. Gentleman say what percentage those figures are of the total cost of those articles?

Mr. Maudling: I think it would be easy to work it out. Certainly, 10s. on 100 dozen tennis balls or 18s. 6d. on a ton of linoleum would not amount to


much. Perhaps the right hon. Gentleman could make a few of these calculations.
To sum up the reasons why the Government cannot accept this new Clause, as preceding Governments have been unable to accept similar proposals: first, there is the cost of the token proposal, which would be £6 million a year, and the full rebate would cost £30 million. Secondly, there are the real administrative problems involved which we have studied with great care on a number of occasions when we have been approached by hon. Members interested in this matter from the point of view of their constituencies. We should like to be able to settle the problem in order not to have it pressed upon us so often. There is no lack of will on the part of the Government to solve the problem, but it does not seem possible to devise satisfactory administrative means of dealing with the question. For those reasons I regret to say that I cannot accept this new Clause.

Mr. Ede: The hon. Gentleman has said that there is no lack of will on the part of the Government to deal with this question. I suggest that the Government would find a great deal more will to deal with it if the hon. Members for Altrincham and Sale (Mr. Erroll) and Croydon, North (Mr. F. Harris) and the hon. and gallant Member for Macclesfield (Air Commodore Harvey), who spoke on the matter last year and who apparently wishes to speak this year, found sufficient physical strength to walk into the Lobby against them on this occasion.

Mr. Maudling: Would that not have applied to the right hon. Gentleman himself a few years ago?

Mr. Ede: Very likely, but there is no reason why one should not give the hon. Gentleman, who is just a beginner, the result of one's experience. I had hoped that it would have been accepted in the spirit in which it was tendered.
I am like the hon. Member for Croydon, North, in that I have a dry cleaning firm in my constituency, and I am a little surprised from the inquiries that I have made to learn that the problem of administration is as difficult and great as the hon. Gentleman suggests. I often hear that story from the Treasury Bench,

until the moment when they make up their minds that it is as well to give way and then it is astonishing how, with that decision made, the difficulties suddenly seem to vanish. After all, every hill looks steeper than it really is as one approaches it, and if the Government would only start on the upward path, difficult as it now appears, they would be surprised at how the road appears to level out once they have made up their minds that the journey is worth while.
There can be no doubt that this tax is very greatly resented by a number of small but important industries in the country and I do not think that it is much good quoting to us today what the Prime Minister said 25 years ago. Once one starts going back to what the right hon. Gentleman said in the past it will be found that some of our memories go back a good deal further than 25 years ago.

Mr. Maudling: I was about to quote a quotation from the Prime Minister made by the right hon. Gentleman two years earlier.

Mr. Ede: I know. There are occasions when I feel tempted to quote what the present Prime Minister said 50 years ago, which would be even more uncomfortable for the Treasury than what the right hon. Gentleman said 25 years ago.
I am informed by those skilled in these matters that there is not much difficulty, from the technical point of view, in dealing with this subject, because the flashpoint of the oils in question is very different from the flashpoint of petrol that is more generally consumed, and the distillation range is sufficient to make it quite easy to make a differentiation. I quoted the figures last year and I do not intend to quote them again today. They were not challenged on that occasion by the present Minister of Materials who was then Minister of State for Economic Affairs and I assume, therefore, that they were accepted.
It would appear that the concessions that were made by my own right hon. Friends when they dealt with this matter did not involve as much administrative trouble as at one time was expected, and I should have thought that in view of the arguments that have been put forward from both sides of the House today, in perfectly good temper, the Government could have made a concession along


the very modest lines suggested by the hon. Member for Altrincham and Sale.
This is a subject that has been before the House on several occasions and the prices in some of these industries have risen rather considerably in recent years as a result of economic changes. The small sums that the Economic Secretary to the Treasury mentioned today are, after all, the kind of sums that really count when one is getting into competition in foreign markets. It is no use the hon. Gentleman and his colleagues saying that we must be very careful because we are now in a buyers' market and every increase in cost makes it more difficult for commodities to be sold abroad, and then make little of such charges as result from their own policy when they are applied to the cost of commodities.
I hope that the Economic Secretary will think again and that he will come to the conclusion that the time has at last arrived when this real differentiation between the use of various forms of hydrocarbon oils ought to find expression in the Finance Bill. As far as I am concerned, if the hon. Member for Altrincham and Sale is prepared to tell a Division I can assure him that he will have at least one to count.

Air Commodore A. V. Harvey: I was disappointed that my hon. Friend the Economic Secretary did not refer to light hydrocarbon oils used by the aviation industry, to which my hon. Friend the Member for Altrincham and Sale (Mr. Erroll) referred when he moved his Motion. I have an interest in this industry, but I am concerned mainly with the engine manufacturers. As we all know, jet engines are gradually taking the place of piston engines in aircraft, but, nevertheless, there is a great demand for piston engines in helicopters throughout the world, and that demand will exist for many years to come. I know of a firm which is spending very large sums of money in developing piston engines for helicopters. The engines will have to be run on the bench for several thousand hours and duty will have to be paid. Then there will have to be proving flights of a great many hours and duty will have to be paid again.
The helicopter industry is waking up and good aircraft are being produced. We shall have new competitors from France where their export price will be more in line with ours than will be the export price in America and Canada. In a year or two B.O.A.C. will be operating jet aircraft almost entirely, using kerosene on which duty is not paid; but B.E.A.C., on their lines in Great Britain, and small operators up and down the country and in the Highlands and Islands of Scotland in which you, Mr. Speaker, no doubt are interested, will be using petrol and will have to pay duty. That is an anomaly which ought to be examined.
We have a very flourishing and promising aircraft industry which can earn for this country foreign currency and render great help to our economy. I think that in this matter the Treasury will be very unwise to proceed in the present way year after year. I was pleased to hear that the right hon. Gentleman the Member for South Shields (Mr. Ede) and his hon. Friends would come into the Lobby to support us if this Motion were pressed to a Division, but my hon. Friend the Member for Altrincham and Sale has spoken on this subject on many occasions during the last seven or eight years and there was no rush from the party opposite to support him. I leave it to the good will of the Government, if they cannot do something immediately, to give an assurance that in the next 12 months something will be done to regularise this anomaly.

Mr. Erroll: I rise with the permission of the House to say that, naturally, I can hardly describe myself as satisfied with the statement that has been made. However, I detected some favourable signs. I thought I noticed a more receptive attitude than I had noticed for several years past. If it was not as receptive as I should have liked, that was possibly because the Economic Secretary to the Treasury had not had time to digest fully the very cogent arguments put forward today.

Mr. Jay: Could the hon. Member tell us what those favourable signs were, because we did not detect them?

Mr. Erroll: It was the fact that most of the arguments which the Economic Secretary used were so well worn that,


obviously, they had been used many times before, and that, therefore, he would look at the new arguments which we used today, refresh himself on the matter in the next few months and be more favourably disposed towards us next year. It would be unfortunate to harden the heart of the Government against us by pressing this Motion to a Division. I therefore beg to ask leave to withdraw the Motion.

Motion, and Clause, by leave, withdrawn.

New Clause.—(AMENDMENT AS TO WHOLESALE VALUE FOR PURCHASE TAX.)

For subsection (1) of section twenty-one of the Finance (No. 2) Act, 1940, there shall be substituted the following subsection:—
(1) The wholesale value of any goods in respect of which tax is chargeable shall be taken to be the price which in the opinion of the Commissioners the goods would fetch, on a sale made at the time when the tax in respect of the goods becomes due by a person selling by wholesale in the open market in the United Kingdom to a retail trader carrying on business in the United Kingdom only, if no tax were chargeable in respect of the sale and it were made in the circumstances specified in the Eighth Schedule to this Act:
Provided that—

(a) where goods are sold to a retail trader under a chargeable purchase made in the circumstances specified in the Eighth Schedule to this Act, the wholesale value of the goods shall not be taken to exceed the price at which they are sold under the purchase (excluding any amount due from the buyer to the seller by reference to tax for which the seller may be accountable in respect of the purchase) by more than such amount, if any, as in the opinion of the Commissioners equals the costs of wholesale distribution which will subsequently be incurred or borne by the buyer; and
(b) where goods, of a kind normally sold to retail traders in the circumstances specified in the Eighth Schedule to this Act at a price including the cost of delivery to the buyer at his place of business, are sold to a retail trader under a chargeable purchase at that price and in those circumstances save that an additional charge for delivery is borne by the buyer, that additional charge shall be disregarded in determining the wholesale value of the goods."—[Mrs. Castle.]

Brought up, and read the First time.

5.0 p.m.

Mrs. Barbara Castle: I beg to move, "That the Clause be read a Second time."

This Clause deals with the question of uplift—a matter which is less simple than it might appear at first sight. In fact, I am a little overwhelmed by the difficulty of dealing with this highly technical matter and explaining it to the House, and I am encouraged to do so only in the belief that the Financial Secretary probably knows a good deal less about the subject than I do.
Last year I drew the attention of the House to the fact that the Chancellor of the Exchequer was getting more Purchase Tax than he was entitled to get, owing to the basis on which it is calculated. My revelations so shamed the Chancellor that he set up a special Committee—the Grant Committee—to inquire into the whole question of wholesale valuation for Purchase Tax purposes. The Committee have now reported, and they have made it quite clear that the practices to which I have referred do exist, are wrong, and should be dealt with. I am rather surprised and a little alarmed to find that the Chancellor of the Echequer has not put down a Clause to deal, either in whole or in part, with the recommendations of the Grant Committee.
I am wondering if there is not some significance in the fact that, whereas last year, when I was merely explaining and exposing the problem, the Chancellor took the trouble to be present and to answer me, this year, after a full investigation has taken place and the Committee have reported to the effect that many uplift practices are wrong and should be abolished, the Chancellor is not present. Much as we enjoy the company of the Financial Secretary, it is obviously a matter of political significance that the Chancellor is not here to tell us what he proposes to do about the Grant Report and why he proposes to do it.
This behaviour is in marked contrast to the Chancellor's interest in the Report of the Hutton Committee, when he rushed publicly to pronounce upon and adopt the recommendations of that Committee on the question of rebate. I would go so far as to say that the reason for this silence, and for the evasiveness of the Chancellor, is that he is getting considerable sums of revenue to which, on a fair interpretation of Purchase Tax law, he is not entitled and which he will lose if uplift is abolished and this injustice to the consumer rectified.
I believe that consumers today are paying considerably more in Purchase Tax than they should be if fair practices of valuation were adopted. In their Report the Grant Committee make it quite clear that in considering this question they felt that the decision whether or not uplift was desirable should not be taken on revenue grounds. They said that such considerations were irrelevant. The Chancellor therefore owes us his presence here, and he also owes us a very full explanation of his attitude and actions. Until we get that explanation he must remain under the suspicion of having dodged this issue because he wants to retain revenue which he is at present unfairly obtaining.
I want the House to be patient while I explain the situation which the Grant Committee have revealed, and the way in which my new Clause proposes to deal with it. Under Section 21 of the Finance (No. 2) Act, 1940, Purchase Tax is to be calculated upon the open market wholesale value of chargeable goods, and it is to be levied on the retailers' purchases from manufacturers or wholesalers. The present difficulty has arisen from the fact that the Customs and Excise authorities, in administering the Act, are interpreting "wholesale value" in certain arbitrary ways, to the detriment of the consumer.
Where a retailer buys through a wholesaler no difficulty or argument can arise; the wholesale price in that case is obvious and clear. The whole difficulty has arisen in connection with those cases where the retailer buys direct from the manufacturer. In those cases, the Customs and Excise authorities have argued that the actual price paid by the retailer for his chargeable goods is not the wholesale price, and they have therefore uplifted the actual buying price of the retailer by certain quite arbitrary percentages, fixed in relation to a notional wholesale price.
In justification of this procedure, which obviously means that the ultimate consumer is paying more tax than he otherwise would, they say that if they were to take the actual retailer's buying price as the basis on which to calculate Purchase Tax, first, it would not reflect the cost of certain wholesaler functions which in some cases are carried out by the retailer—and my Clause deals with that, because it is a point of substance—and, second, it would give an unfair advantage to large

buyers, who get a reduced price for buying in quantity, and, therefore, as their actual buying price is lower, would pay a reduced amount of tax.
With regard to the first point, only in a very small number of cases does the retailer who buys direct from the manufacturer perform wholesaler functions. Those cases are dealt with in my new Clause, and I shall come to them in a moment. Dealing with the question whether, if the actual buying price is taken, it adequately reflects the wholesale element, in my speech last year on another Clause dealing with uplift, I pointed out that over a whole range of goods, in particular furniture and clothing, the normal channel of sale for both large and small buyers is direct from the manufacturer to the retailer.
As the sale is direct in those cases, even to the small retailer, it is obvious that the manufacturer is doing his own wholesaling, and the cost of that wholesaling is reflected in his actual selling price to the retailer. The manufacturer is carrying considerable stocks to replenish the demands of the small retailer as those demands arise. He is employing travellers, he is paying delivery charges, and is acting as wholesaler as well as manufacturer. As, therefore, the cost of wholesaling is reflected in his selling price to the retailer, it is ridiculous that the Customs and Excise should say, "You have by-passed the wholesale stage and somehow or another have cut something out, so we will put it back again."
It is ridiculous for them to do what they have been doing—arbitrarily fixing a percentage by which to uplift his selling price. Last year I gave the normal percentages of uplift which they added in these cases—7½ per cent.; they add 7½ per cent. to the actual selling price in order to reach this notional wholesale value. On that figure, including the arbitrary 7½ per cent., they calculate the Purchase Tax which the poor old consumer has to pay. At a time when we are all anxious to relieve the burden of taxation, there is an additional element of tax as a result of uplift.
The Chancellor obviously had no answer to my case when I made it last year. He appointed the Grant Committee who, in their Report, have unanimously accepted the sense of this argument. I hope that at any rate we shall


have this afternoon the Government's pronouncements on the unanimous recommendations of the Grant Committee. They unanimously recommend, in recomdation (1, a):
the actual price should not be increased by the interposition of an imaginary wholesale merchant;
Secondly, they recommend that,
the actual price should not be increased by reference to wholesaling costs unless these are actually incurred or borne by the purchaser.
The Committee also agreed unanimously, as does my new Clause, that in the small number of cases where the retailer does some of his own wholesaling, the retail buying price should be uplifted. I agree that that is the one case in which uplift is justified, because if it were not done in that case, then a wholesale element would be missing from the price on which the tax was charged. But this applies only to those cases where the manufacturer delivers to a central stockroom, perhaps to a firm with a number of shops or branches, and the retailer in that case pays the delivery charge to his various shops or branches. In such a case an element of delivery charge is missing from the price which the retailer pays, and uplift is clearly justified.
But there is also the opposite type of case, where the Committee unanimously agree, as does my new Clause in its second proviso, that where the price which the retailer pays usually includes a carriage charge, but on some occasion he is charged extra carriage for a special order—perhaps because it is a special delivery or small in size—then the extra carriage charge should be disregarded for tax purposes. The Grant Committee were unanimous in that recommendation, and I include it in my Clause.
So far, so good. It is at this point that the minority of the Grant Committee parts company with the majority and it is at this point that I part company with the majority Report. What the majority say is this: that uplift should not be abolished where the retailer's actual buying price is lower because he has bought a larger quantity than usual or where he enjoys any other buying advantage. The Grant Committee are extremely vague about what can be included in the term "any other buying advantage."

They just think there may be something somewhere; they do not define or specify it, they merely stick that in. They make this recommendation, although in their Report they agree that logically there is a good deal to be said for the tax being charged in all cases on the actual retailer's buying price, whether or not this reflects a quantity discount.
5.15 p.m.
I am delighted to see that the Chancellor of the Exchequer has joined us, and I hope that we shall have some precise announcement of Government policy as a result of his presence here today. The Grant Committee, therefore, accept the logic of the argument, which is certainly more just to the consumer, that Purchase Tax should be levied on the actual retailer's buying price and not uplifted because the wholesaler has been by-passed, or because there has been a quantity discount or because in some other respect a smaller price has been paid by a certain type of retailer. Although they admit the logic of this argument and agree that there is very little justification for playing about with any "notional" element in the calculation of wholesale value—which can only be a purely arbitrary figure—they none the less recommend that uplift should not be abolished in cases where the price is reduced as a result of a larger quantity being bought.
When we examine their reasons I think we shall find that they ought not to be acceptable to the House. The first and major ground on which they reject the logical argument is that it would cause some difficulty in the case of price-maintained goods. The problem, they say, is this: where a retail buying price is reduced for any reason, that reduction ought to be passed on to the consumer if we are to take that lower price as the basis for the calculation of tax. But in the case of price-maintained goods, by the very nature of the contract between the manufacture and the retailer, any reduction which the retailer gets for buying in quantity cannot be passed on to his consumer because the goods are price maintained. The manufacturer has fixed the price at which the retailer must sell. Consequently, if the manufacturer gives a discount because the retailer has bought in quantity, the retailer


will not be able to pass it on to the consumer, so that if tax were calculated taking the quantity discount into consideration, then in that case the retailer would get a windfall.
This little problem has, therefore, become the major ground on which the Committee have not recommended the abolition of uplift in this case. I suggest to the House and to the Chancellor that this is a supreme example of the tail wagging the dog. Whereas it is true that quite a large proportion of the goods sold in this country may be price maintained, it is also true that only a very small proportion of those price-maintained goods are sold through channels which bring a quantity discount. In fact what the Report is saying is that as the abolition of uplift in these cases would make a present to the retailer in what would be 10 per cent. of the cases the consumer is to be deprived of his possible advantage in 90 per cent. of the cases, because in 90 per cent. of the cases where the retailer is buying cheaper because he is buying in larger quantities he is not buying price-maintained goods and he is passing the advantage on to the consumer.
Therefore, what the Grant Committee have said is that because there is this problem of price-maintained goods justice is not to be done to the consumer. I suggest it is quite wrong that the Report should in this way bolster up the price structure of price-maintained goods. There is a good deal of division of opinion in this House on the desirability of price maintenance at all, and the Grant Committee recognise that this is a highly controversial question by going out of their way to say it is not part of their job to come down on either side of the argument or to frame their recommendations in such a way that they might seem to be either for or against the principle of price maintenance; but in fact, by distorting the logic of their own argument to avoid creating difficulties for manufacturers of price-maintained goods, the Committee are just doing that: they are coming down on the side of price maintenance, and we on this side of the House certainly cannot accept that as an argument.
I agree, therefore, with the minority Report when they say quite emphatically that the difficulties outlined in the majority

Report and the dangers which will arise by abolishing uplift are outweighed by "the more certain benefits to the community of adopting a basis of tax valuation which more easily accommodates more competitive trading techniques." The minority Report comes down emphatically in favour of the total abolition of uplift except in the one case I have mentioned, namely, the case in which the actual retail buying price does not reflect a certain transport element.
Why do they do that? They do that primarily on the argument that any reductions in price down the chain of distribution ought to be passed on in their totality to the consumer, and surely it is monstrous that the consumers in these difficult times should, by administrative devices of Customs and Excise, be compelled to pay more tax than they otherwise would. The Chancellor may argue that uplift makes a very small difference in most cases, that the element of uplift in the final price which the consumer pays is a very small one, but I think that that is an argument which the Chancellor, who claims to be a champion of the consumer, ought not to adopt in this House.
Let me give a couple of examples which I have tried to calculate. If I pay 1s. 6d. for a comb the chances are I am buying it from a channel of distribution which is affected by uplift. In that 1s. 6d. there is an element of 2½d. in respect of Purchase Tax, and of that 2½d. a halfpenny will be attributable to uplift. The Chancellor may say, "What is ½d. in 1s. 6d.?" Every housewife in this country knows that halfpennies here and halfpennies there add up to a pretty oppressive total by the end of a week. In any case, if this element of tax is being levied quite arbitrarily it is intolerable that it should be paid.
Let me give another example to bring out more clearly, more dramatically, how the housewife is being charged extra tax. If I go into a big store and buy a fibre suitcase for 45s. the tax element will be about 12s., and of that 12s. I shall pay 2s. in respect of uplift. It takes a good deal of justifying to continue levying that additional tax at this difficult time.
One of the arguments which has always been used in favour of uplift is that it protects the small retailer from the unfair advantages which the large buyer enjoys. The Grant Committee make the point


that unless the actual buying price of the retailer is uplifted to offset any discount he gets for quantity then the poor small shopkeeper will be driven out of business. We really must look at this argument a little more carefully. I know it is a good sentimental wicket on which the Chancellor will no doubt some time later attempt to bat, but the Report itself, with its evidence of the representations which were made to the Committee, does not really bear out that point of view, because if we examine who are the small retailers who are making an outcry against the abolition of uplift we find that they are a very special small group.
There are two types of small retailer. First there is the small retailer who specialises in a particular line of goods—the draper, for instance. He is not protesting against the minority Report. In fact the Drapers' Chamber of Trade made representations to the Grant Committee that uplift ought to be abolished altogether, including uplift in respect of quantity discount. They know perfectly well that uplift is unjustifiable, and they have said so, including the small shopkeepers. Again, the National Chamber of Trade made representations in favour of the total abolition of uplift.
Who is the small retailer who protests? He is the village shop type of retailer, the all-in man. It is interesting that the Grocers' Federation have protested against the abolition of uplift for quantity discount. Why? There is no Purchase Tax on groceries. The small grocer is not thinking of his main line of sales when he protests. What he is thinking of are the bits of stationery that he carries as a sideline, or the bits of haberdashery he carries as a sideline. The only situation in which he carries stationery and sewing thread as a sideline is the situation in which he is the one general purposes store for the whole of a local community.
In other words, he is the village shop sort of man, and the whole raison d'etre of that type of shop is its convenience to the consumer. I agree completely with the minority Report that the village shop which sells the bits of stationery and haberdashery is going to get its customers anyhow, even if a large store in a town several miles away is able to sell a little bit more cheaply as a result of abolishing

uplift, for the raison d'etre of the small retailer in a village is that he serves a neighbourhood which depends on him for convenience.
I suggest to the House, therefore, that the principle which we ought to adopt today, and which is reflected in my new Clause, is that Purchase Tax ought to be levied only on the actual retailer's buying price. If we had in this country, as some hon. Members opposite have often argued we ought to have, instead of Purchase Tax a retail sales tax—and when introducing the Purchase Tax Bill in 1940 the Government spokesman of the time said that Purchase Tax was intended to be a kind of sales tax—then obviously that tax would be levied on the actual retail price.
5.30 p.m.
We should not make Woolworth's accept an uplift on their actual selling price for the purpose of calculating a sales tax. We should have the actual selling price taken as the criterion. If we move the point of levying purchase tax back along the chain of distribution in order to suit the convenience of the Treasury, it is quite intolerable that the consumer should have to bear an additional element of tax as a result.
There is a final point that I want to make in connection with the reasons why the House should accept the minority Report of the Grant Committee, abolish uplift entirely and accept my Clause. The majority believed that the uplift levied in the cases I referred to last year was wrong and ought to be abolished. It is very interesting that since the debate which we had in the House at this time last year, administrative action has been taken, and Customs and Excise have considerably altered the amount of uplift paid on the types of cases to which I referred.
If the House will turn to Appendix C of the Grant Committee Report they will find that in July of last year revised tax values were brought into operation as a result of negotiations and bargaining between the Customs and Excise and certain trade associations. Quite arbitrarily, behind the scenes, there was bargaining about what level of uplift should operate and in what cases. This resulted in the reduction of uplift in a certain number of cases. That, in fact, was an admission


that the anomalies and injustices to which I referred last year did exist and ought to be dealt with.
So long as uplift remains at all, however, it is outside the control of this House to stop Customs and Excise putting the whole situation back where it was before. If we are going to say, "We will abolish uplift in these cases where it is the normal trade practice to by-pass the wholesaler, but we will not abolish uplift where the retailer gets a lower price for bying in quantity," then we give a wonderful administrative handle to Customs and Excise to reverse the reforms which they have introduced in the last 12 months. They can say, in a number of these cases, "There is a quantity element here." If the retailer buys two instead of one of a thing it can be said that there is a quantity element involved. We can argue about it indefinitely and no one can prove how much of the price reflects a quantity reduction.
As the minority Report rightly says, it is a notional figure, and so long as we have Purchase Tax fixed purely on notional figures, there is no protection for the consumer against the abuses of the administrative machine. There are too many arbitrary administrative decisions already taken in the operation of our finances outside the control of this House. I want the control of this matter and the protection of the consumer brought back within the confines of the decisions of this House. The only way to do that is by deciding, in accordance with the minority Report, this afternoon, that we will abolish uplift altogether and that we will get rid of this notional calculation and base Purchase Tax on the actual retailers' buying price in every case, except in the small one to which I have referred.
In that way, we shall save the consumer millions of pennies here and sixpences there. We owe this to the consumers of this country. It is no good the Chancellor of the Exchequer saying at one moment that he wants to reduce the cost of living by cutting Purchase Tax and, at another time, for purely revenue considerations, refusing to operate a logical and fair administrative principle. It is because my new Clause would introduce that logical and fair administrative principle that I ask the House to accept it this afternoon.

Mr. Anthony Greenwood: I beg to second the Motion.
I think that the House will agree that my hon. Friend has moved it so clearly and well that I am in a position to discharge my responsibility with comparative brevity. Like my hon. Friend, I am a little amazed at the coyness which the Chancellor of the Exchequer has shown in respect of the Grant Committee's Report. On a previous occasion, he welcomed the Report of the Hutton Committee with some alacrity, but in the case of the Grant Committee's Report he has dillied and dallied in a way more appropriate to Marie Lloyd but a little unbecoming, I think, in the Chancellor of the Exchequer. Perhaps now that the Chancellor is with us this afternoon, he may explain why he has shown this remarkable coyness in respect of the Grant Committee's Report.
We can understand that the Chancellor is reluctant to join issue with Mrs. Hall and Mrs. Jay who come from that remarkable generation at Oxford which produced both the Financial Secretary to the Treasury and my hon. Friend the Member for Blackburn, East (Mrs. Castle), but I cannot understand the Chancellor's reluctance to accept the unanimous recommendations of a Committee which he himself appointed. The hon. Member for Blackburn, East referred to the Chancellor as being the champion of the consumer. I think that a flicker of incredulity ran through the House at the Chancellor of the Exchequer even claiming that he was that. We regard the party opposite as being charged with the Government responsibility of protecting the traders of this country.
When discussing Purchase Tax we find the remarkable situation that no representative of the Board of Trade is present on the Treasury Bench. We do not expect the spokesmen of the Board of Trade in this House to make very many contributions to our discussions, but we feel that their presence here would be an act of courtesy to the House. I should like to say briefly, for the benefit of hon. Members who have come into the Chamber since this debate began, what I consider this Clause to do.
It seems to me that in this new Clause we are doing three things. We repeat the present statutory definition of the wholesale value but in addition make it subject to two provisos.
The first, as my hon. Friend said, is in subsection (1, a) and abolishes the uplift on retailers' purchases from manufacturers, except where the retailer himself incurs wholesaling cost. My hon. Friend has spoken at some length on that point and I do not propose to develop it. The second proviso, which is contained in subsection (1, b), and which is the unanimous recommendation of the Grant Committee, is that Purchase Tax should not be levied on extra delivery charges paid by retailers on small orders for special delivery.
I am glad to see the hon. Member for Bridgwater (Mr. Wills) sitting in some obscurity on the fourth bench back, because he made a remarkable speech on this subject when we were discussing it a year ago. On that occasion he said:
… there is an anomaly which arises out of the provision which states that, for the purpose of computing the wholesale price of goods on which Purchase Tax is charged, the cost of such things as postage, insurance, packaging and other things is to be brought in before the percentage is charged. That is another form of uplift and extra charge which is really anomalous, and which should be done away with. It means, in fact, that the tax is not based on the true price of the goods, but on a price to which is added the cost of carriage between wholesaler and retailer, and I think this is a false basis. It places the small shopkeeper who is at some distance from his wholesaler at a disadvantage against one living close to his wholesaler."—[OFFICIAL REPORT, 27th May, 1952; Vol. 501, c. 1301–2.]
That was a very sound exposition by the hon. Member, and I hope we may find him in the Lobby with us when we continue to show our loyalty to the principles which he expounded a year ago. I have never understood why it was that the hon. Gentleman was made an acting Whip, unpaid, shortly after that speech. Whether it was as a reward for services rendered, a punishment for what he had done or an act of appeasement I have never been able to understand.
As my hon. Friend has confessed, there will still be anomalies even if the new Clause is accepted, but, at any rate, in spite of anomalies, we shall be doing something to protect the consumer. We admit that some concessions and relaxations have been made during the past year, and, I think, made in the light of criticisms expressed from both sides of the House a year ago, but nevertheless the imposition of uplift still tends to

militate against any rationalisation of distribution and, in effect, the Treasury are saying to retailers, "If you make any saving, we will see that we get part of it in the Treasury."
That is not a healthy attitude. It is bad for trade. It tends to increase the rate of tax which is chargeable on cheaper goods and, as the Chancellor admitted a year ago, in some cases it has the effect of making comparatively cheap goods sufficiently expensive to come above the D level and be liable for tax which would otherwise not be payable. For those reasons, I have pleasure in seconding the Motion.

Mr. F. A. Burden: I and my right hon. and hon. Friends have lost no opportunity in stating our objections to Purchase Tax in principle, and I have spoken about uplift on several occasions since I have been in the House. While I do not wish to follow at any great length what has been said by the hon. Lady the Member for Blackburn, East (Mrs. Castle), in putting her case so forcefully and persuasively to the House, I want to join issue with her on one point She is not alone in her opposition to uplift. Many of my hon. Friends are equally opposed to it.
My right hon. Friend took a very big step forward when he set up the Grant Committee to report on that aspect of Purchase Tax. I have no doubt that he did so because he had serious misgivings about the equity of the tax. Equally, in the past two years my right hon. Friend has done more to ease the burden of Purchase Tax than any other Chancellor of the Exchequer has done in the eight years since the end of the war. That should be borne in mind, for it is very creditable.
5.45 p.m.
I hope that my right hon. Friend will today announce that uplift will be abolished. It has been, and is, a source of considerable annoyance to the trade. It has imposed, above the normal Purchase Tax, an added tax upon goods which, if it went, could be sold more cheaply than they are at present. The most glaring example of the inequity of the tax—which was supposed to raise the cost only of goods sold directly by the manufacturer to the retailer, and only in cases where there was no question of the


person selling to the retailer carrying the normal costs of distribution—is that of cosmetics, which exposes completely the fallacy of the argument.
Only last year, as the result of advice which I gave it, one firm in the cosmetics trade obtained relief from uplift. In the cosmetics trade, each large manufacturer almost invariably carries his own selling staff, advertises his own goods and has to carry large stocks, and in this trade, above all trades, the manufacturer carries the normal costs of the wholesaler, although he sells to the retailer. I believe that to this day many manufacturers of cosmetics—I have no interest in the trade—are charged uplift, and one moment's thought should convince the Chancellor that that is completely inequitable in this trade.
The same thing has occurred in many other trades. When I came back from the war I found that some firms in the trade in which I was interested were charged uplift of 7½ per cent., but if the firm agitated very strongly with Customs and Excise for remission of the tax, and fought hard enough, almost invariably the tax was removed or considerably reduced. In the case of the unfortunate firms who, because of lack of knowledge or failure to press their case sufficiently hard, still paid the Purchase Tax, either their sales suffered or the public had to pay more for their goods.
One of the strongest arguments which can be made against uplift is illustrated by a certain retailer who manufactured goods to sell in his own store. He went to court on the issue. Judgment was given against him, but the judge said that he could not understand how uplift was arrived at and asked whether a Customs and Excise official tossed a coin, saying that if it came down heads the firm would be charged Purchase Tax and if it came down tails it would not. The judge said that it was a queer way of arriving at whether uplift should be charged, and he made it clear that, in principle, he was opposed to it.
I believe that my right hon. Friend is anxious to take every possible step to reduce the cost of living. Abolishing uplift might not slash the cost of living to any great degree, but it would be a step in the right direction. Under the present

system of uplift there are glaring anomalies which, on examination, cannot be justified. The Grant Report has made that clear. The Committee were set up by my right hon. Friend to advise him, and I am sure that, on examination of the Report, he will agree with it in principle. I hope that he will take action which will please not only the hon. Lady and some of her hon. Friends but also those of us on this side of the House who have campaigned for the abolition of uplift.

Mr. Percy Shurmer: Then vote for the new Clause.

Mr. Boyd-Carpenter: Uplift, as a word, has a faintly theological ring, but, if hon. Members had not previously appreciated it, I think this debate would have made it clear to them that it is a subject of quite horrible complexity. I agreed with the hon. Lady the Member for Blackburn, East (Mrs. Castle) when she said that it was a topic which was a little less simple than it might first appear to be, an observation which perhaps might also be, not inappropriately, applied to herself. The hon. Lady was good enough to preface her observations with the comment that I knew less about the subject than she did. It was only as her speech progressed that I began fully to appreciate the brutality of that comment.
May I say at once how grateful my right hon. Friend and I are, as I am sure the whole House is too, to the Grant Committee, both to those who composed the majority and the minority Reports, for their devoted labours into the complexities of this enormous and difficult subject. Whether or not one accepts any of the particular conclusions to which they came, one ought to express the gratitude of the whole House, as I hope I am doing, for their labours on this subject. It is perhaps not without a certain interest that the two extremely able ladies who signed the minority Report have a matrimonial connection with Her Majesty's Treasury.
For reasons which I shall make clear in a moment, I do not want to enter into any very prolonged arguments on the theoretical basis of uplift. I am bound to remind the House that uplift, whatever the hon. Lady may think of it, is a system


which has been in operation in connection with Purchase Tax virtually from the beginning of the operation of the tax in 1940, and has been operated under a variety of Governments.
I hope, therefore, that we may be able to discuss these complexities without generating too much indignation. In substance, as the hon. Lady herself made clear, a part of the case for uplift—and I am not at this moment expressing any opinion as to its validity—is perhaps founded upon the desirability of seeing that fairness and equity are done to the different kinds of traders with whom we deal, the large and the small. I think the hon. Lady rather brushed this off so far as it affected the small trader. Her attitude this year is different from the line she took last year, when she went out of her way, in moving a new Clause, to describe it as an attempt to avoid discrimination between the big buyer and the small buyer. But it is quite clear that the proposals contained in paragraph (a) of this new Clause would, of course, militate greatly in favour of the large trader, who is able to buy, by reason of the large scale of his purchases, at a lower price per article than is possible for the small trader.
The House will be aware, for example, that a large departmental store, either because it is purchasing large quantities of a particular kind of article or because it is purchasing a large number of many articles, is able, perfectly properly, to obtain supplies of these articles at lower prices per article than the small trader who buys only a few at a time. The problem to which I think hon. Members should address their minds is that there is, broadly speaking, but with some qualification, an objection to assessing the tax on the actual price paid by the retailer because, of course, that would cause the small trader to pay more tax than the large departmental store buying on a large scale. It would, therefore, accentuate through taxation the buying advantage of the large store.
I am not at this stage saying that that is necessarily an insuperable objection, but it is a serious factor, and I think that hon. Members on both sides of the House might well bear in mind, in considering this matter, that it is desirable to operate the tax as fairly as possible

as between two categories of traders. It is very largely with that consideration in mind that a variety of Governments from 1940 have operated some kind of system of uplift.

Mrs. Castle: How does the hon. Gentleman explain the strong representations made by the chambers of trade such as the Drapery Chamber of Trade and the National Chamber of Trade, many of whose members are small retailers?

Mr. Boyd-Carpenter: The hon. Lady is deluding herself if she thinks that I am not coming in due course to the representations I have received, but perhaps it would be more convenient if I took them in a coherent order because otherwise I might detain the House unduly.
There is a clear fact which I do not want to repeat but which should be clearly in the minds of hon. Members, that a tax assessed solely on the actual price of the particular transaction must increase the relative and competitive buying advantage of the person, shop, institution or business that has already a buying advantage over its competitor. That is one aspect of the matter to which the Grant Committee paid a very great deal of attention, and it is one that we should bear in mind.
The Committee will recall that after the Grant Report was published my right hon. Friend answered a Question put to him by my hon. Friend the Member for Handsworth (Sir E. Boyle) on 12th May, when he said:
I am at present considering this Report, which is not unanimous. The subject, as the House knows, is a complicated one and the views of traders may well differ. I shall, therefore, be ready to consider any representations that those concerned may wish to make to me in the near future."—[OFFICIAL REPORT. 12th May, 1953; Vol. 515, c. 1048.]
Since then a number of trade representations have been received, but by no means all the trade organisations have responded to my right hon. Friend's invitation. That is no doubt owing to the fact that the period of the annual conferences of these organisations is upon us, and I understand that some of them will be awaiting the meeting of these conferences before making their representations.
A certain number have been received, and I can tell the House that there is a


great variety of testimony and of view. I have a number of them here, but I do not want to inflict on the House either a selective—which would be unfair—or a comprehensive—which would be exhausting—resumé of what they have said. What I am bound to tell the House is that the general effect is that some of them favour the present position, some favour the majority Report, some favour the minority Report and some do not care very much for any of those alternatives. It is clear, first of all, that there is no unanimity of opinion in any direction in the trades concerning this issue. And it is still a fact that quite a number of organisations which may well be concerned have not yet responded to my right hon. Friend's invitation.
In those circumstances my right hon. Friend has not come to a firm and final decision on the major issue, as between the majority and the minority opinion and the status quo. He is still paying attention to the recommendations which are being made from outside, and he will also pay attention to the observations which have been made by hon. Members in the House.
The hon. Lady tried to suggest that there was something rather curious in the fact that my right hon. Friend had not come to a firm decision on this matter in view of the fact that it was possible to announce a firm decision on the recommendation of the Committee set up last year under Sir Maurice Hutton. Apart altogether from the fact that the Hutton Committee made a unanimous recommendation, the recommendation of that Committee did not involve complicated legislation, which either this majority Report or minority Report would involve. Therefore, I should have thought it was fairly natural, and indeed essential, that a somewhat longer period must necessarily elapse before a decision could be made.
6.0 p.m.
Equally I thought that the hon. Lady tried to obscure the issue a little by her reference to the revenue point of view. In view of the fact that my right hon. Friend is proposing in this very Bill reductions of Purchase Tax which will cost £45 million this year and £60 million in a full year, I do not think we need attach much weight to the suggestion of the hon. Lady that uplift was being retained from

a revenue point of view. If there is any force in that criticism, it could fall against all her right hon. Friends in the former Government and the wartime National Government, but it does not make sense to try to suggest that revenue considerations are dominant when much larger amounts of revenue than are involved in the whole of uplift have been conceded by my right hon. Friend as part of his policy of relaxation of the Purchase Tax.
On the major point, therefore, my right hon. Friend has not come to a firm and final decision; that is to say, he has neither accepted nor rejected either the majority Report or the minority Report. He is considering, in the light of the representations made to him, the right course to be taken. It is for that reason undesirable that I should seek to argue the case either for or against the majority or the minority view, since that might indicate some prejudicing of the ultimate decision. It is for the hon. Lady to decide, in the light of what I have said, whether she thinks that a useful purpose will be served by making this issue a matter of Parliamentary and party controversy.
I would refer to the second part of the new Clause, paragraph (b), which relates to the postal and special delivery charges. Unlike the other matter which we have been discussing, that was a unanimous recommendation of the Grant Committee, and my right hon. Friend authorises me to say that he accepts that recommendation in principle. The provision in the proposed new Clause goes a little further than the terms of the Grant Committee recommendation, and what my right hon. Friend is accepting in principle is the Grant Committee recommendation on this point.
My right hon. Friend is at present advised that the implementation of that recommendation under this heading does not require legislation but can be effected administratively. He is looking into that aspect of the matter, however, and should any technical or legal difficulty arise he would not hesitate, in the Finance Bill next year, to ask for the necessary Clause, if necessary retrospectively. I am in a position to say that this Grant Committee recommendation will, it is hoped, be in operation by the end of the summer. The matter is one that has caused a great deal


of irritation, an irritation perhaps disproportionate either to the strictly equitable considerations or to the revenue considerations involved.
As regards the larger issue of uplift generally, my right hon. Friend does not want to be compelled to take a firm and final attitude on this question. He is anxiously and seriously considering it in the light of the observations which have fallen from hon. Members during this debate. For that reason my right hon. Friend cannot accept the proposed new Clause. It is equally a matter for the hon. Lady to decide whether she wishes, any more than is strictly necessary, to embroil this issue as a matter of party controversy, involving perhaps the adoption of positions from which it may be difficult to recede.
That, however, is not a matter for me, and I will conclude by saying that Her Majesty's Government are much concerned about this matter. They realise its importance, from the angle of both the consumer and the trader, and they are anxious that their final decision, when arrived at, shall be one which, while combining fairness between trader and trader, gives the maximum possible benefit to the consumer.

Mr. Gaitskell: Once again, I am happy to congratulate my hon. Friend the Member for Blackburn, East (Mrs. Castle) on a speech on this subject. When, at the beginning of her remarks, she said that she knew more about uplift than the Financial Secretary, I thought she might have been using the word in another sense, in the theological sense, but as she went on with her speech and displayed such a masterly knowledge of the subject. I realised she had meant it in the sense of the Grant Committee Report. What the Financial Secretary has just told us does not lead me in any way to differ from her in her estimate of their relative knowledge of the subject.
I am sure that this should not be treated as a revenue question and I believe that the Chancellor will agree that it would be quite wrong to decide the highly complicated and difficult issue of whether or not uplift should be charged simply on the basis of whether we are to get revenue in from it or not. Secondly, I hope we would agree that there is something unsatisfactory

in any tax if it involves the officials concerned in arbitrary individual decisions.
We all realise that to some extent such decisions have to be made in view of our immensely complicated tax system. For the most part, however, they are made according to rules which are clearly understood. I do not think that the Financial Secretary will disagree when I say that uplift falls into one of those categories where the decisions made often appear to be extremely arbitrary, and where there does not appear to be any particular rule which justifies the decision of the Customs official.
I think, too, that we could agree that if Purchase Tax is levied on the wholesale value of the article there are bound to be cases where what one might describe as an adjustment has to be made in the apparent retail buying price in order to arrive at the correct value for tax purposes; where, for example, the retailer is, in effect, acting as a wholesaler and, although he as retailer is buying at a certain price, it is one which a wholesaler would have paid. That is a point on which the Grant Committee were unanimous. They recognised that in such cases there must be adjustment or uplift.
Then there is the even simpler case where there is no actual sale between a manufacturer or wholesaler or retailer and, therefore, an estimate has to be made. That we can also agree about. The disagreements begin after that point and, as the Financial Secretary has said, there are really three possibilities. One can take the view that the system which has existed in recent years, certainly up to last year, should be continued; a system in which it was the habit of the Customs officials always to introduce a notional stage where there was not an actual wholesale stage and accordingly to add uplift in order to ascertain the value for tax purposes.
On that I think the circumstances have changed substantially since uplift was introduced in 1940 or 1941. I can recall, from the time I spent in the Board of Trade then, that there was great concern for the position of the small retailer. It was felt that it would be unfair to him if he were made to pay a larger absolute tax than the large retailer who bought direct and not


through a wholesaler. In those circumstances, when, owing to the war, the channels of trade were very restricted and when it was by no means easy, and, indeed, sometimes impossible for a retailer to change his supplier and when, in other words, the normal competitive conditions really did not exist at all, I think it was reasonable to give the small retailer that degree of protection.
However, I think we can agree that the circumstances today are different. We certainly do not have the same rigid controls over distribution as we had during the war, and we have, as the Government are constantly reminding us, something much more like a buyers' market than a sellers' market. Competitive conditions have returned and the opportunities for all retailers, whether large or small, to alter their supply arrangements are very much greater. That, I think, is the justification for taking a new look at this problem and seeing whether in present circumstances the system that we have had up to now ought to be continued.
We are then faced with the Grant Report with its majority and minority proposals. I do not propose to argue the case in great detail, because my hon. Friend did that with her usual ability. I only want to draw out one particular and, as it seems to me, quite vital argument. The Financial Secretary said that the real question was whether the small retailer suffered a disadvantage by reason of the fact that the large retailer was able to buy more cheaply, implying that it would be unfair to the small retailer if that were to happen. If I misunderstood the hon. Gentleman, I hope he will forgive me.
But the essential point which should be realised is that the large retailer buys more cheaply because his methods of distribution, the size of his orders and other considerations enable the manufacturer to produce more cheaply. Therefore, the large retailer is contributing to a higher degree of efficiency. There can equally be no doubt that the uplift, right or wrong, as administered up to last year involved a penalty on the more efficient distributor.
That, I think, is really the most vital point, and it comes out very clearly in the Report, because the majority, in fact, propose some modification. As I understand, they propose that where a manufacturer has a wholesale side to his business

and succeeds through greater efficiency in reducing his selling price to the retailer, the advantage of that is, as it were, to be passed on. No uplift is to apply in that case. The retailer, large or small, is to get the advantage of it without the Customs coming along and taking their share.
But the majority continue to deny the benefits—if I may put it that way—of efficiency to the retailer, and I must confess that I find that an extremely difficult point of view to sustain. If we take the view that we want to encourage efficiency at the manufacturing stage, when the wholesaling is done at that stage, then, surely, it is logical to conclude that we ought to encourage efficiency when the wholesaling is done at the distributing stage. The basis for a distinction there is far from clear.
For example, the majority proposals would. I think, come up against very serious administrative difficulties. If, for instance, a retailer places a large order which enables the manufacturer to produce and perform the wholesaling function more efficiently, under which heading, so to speak, is the situation to be classified? Is it a case where uplift is to be applied or not? There is really no way of seeing from the majority Report.
Nor is there any clear indication as to what is meant by advantages from quantity buying. One can see clearly, in the case of quantity discounts, that the uplift is to continue to apply, but, of course, that may not always appear. The price may be a special price arranged for a large quantity which, as I say, enables the manufacturer to produce more cheaply. Therefore, I feel that it is extremely difficult to see the logic of the majority point of view.
6.15 p.m.
In the main, although I think we all recognise that this is a difficult problem, there seems a great deal to be said for the minority proposal. I say this, let me hasten to add, not because of the relationship which exists between one of the members of the minority and my right hon. Friend; nor, let me also add, is it on that account that he is not speaking in this debate. As far as I know, there is no disagreement in the family on this point. It is not because he does not want to disclose disagreement that he is remaining silent this evening.
I think that the minority view is a more logical one, and it seems to me that if in present circumstances we are really serious about trying to increase productivity and efficiency, then the case for abolishing uplift, subject to the few special cases where it has to be introduced to prevent evasion, is a very strong one. Can we afford to give a subsidy to inefficiency? Should we not do everything we can to encourage a greater degree of competition in the distributive trades?
One of the arguments used by the majority in favour of their point of view and against that of the minority is that of resale price maintenance. I must confess that I have very little sympathy with their argument, because I am extremely doubtful whether resale price maintenance as a system ought to be allowed to continue at all. There is the Lloyd Jacob Report, which proposed very considerable changes in the law relating to resale price maintenance.
At the same time, perhaps we could have an explanation from the Government of their point of view on that issue. I certainly would not take it as an adequate reason for maintaining the system of uplift that if it were abolished we should get into difficulties about resale price maintenance, and that there would either have to be a different price at the retail level or that it would simply mean increasing the profits of the larger retailers. I do not think that that is a convincing argument when weighed against everything else.
Finally, I come to the point of view of the Government, and I must confess that I find it extremely disappointing. After all, this is not a new problem. My hon. Friend raised it a year ago, and she then put forward some very cogent arguments for a review of the situation. The Chancellor, I think very wisely, appointed this Committee. The Committee reported 2½ months ago, but since then we have had no indication of the Government's attitude. Even today, the only thing about which the Government have been able to make up their minds is this very small and relatively uncontroversial change to which the Financial Secretary referred.
The only excuse we get for the delay in his matter is that the Chancellor is anxious to hear the views of the trade. Has the Chancellor read the Report? He

will find the views of the trade set out in it. As the Financial Secretary says, he will find every point of view in the Report. It is perfectly clear that the Chancellor's answer and that of the Financial Secretary are simply stalling replies. They are unwilling and unable, too timid and too evasive to make up their minds on this issue.
That really is not very creditable to the Chancellor. We all know that he is extremely busy at the moment and we sympathise with him. He must be very overworked. Nevertheless, I feel that this is a matter to which he should have given attention a little earlier. It may be a difficult decision to make, but that is no reason for not coming to a decision on it. We have made our point of view on this very important matter quite clear, and I give the Financial Secretary warning that we are prepared to press the matter further.
It really is not good enough to say, "Do not divide the House; you are making a party issue of it." As a matter of fact it is not a party issue. All the speaking has been on one side today, but we invite the hon. Member for Gillingham (Mr. Burden) and any of his hon. Friends to come into the Division Lobby with us when we vote on the new Clause.

Mr. Burden: It is curious that the right hon. Member should adopt this line now, because he did nothing at all about abolishing uplift during the whole period when he was Chancellor, whereas my right hon. Friend has made concessions.

Mr. Gaitskell: I dealt with that very fully and explained that there was a case for uplift when the tax was introduced during the war and in the immediate post-war period. So far as I can recollect there was no particular pressure for any change, while I was at the Treasury at any rate. But I think it has increased substantially as competitive conditions have returned. We have had a Report and the Report lays bare the situation. There really is no case for further delay and I suggest to the Committee that we should register our views in the Division Lobby.

Mr. R. A. Butler: I would not have taken part in the debate had it not been for the observations of the hon. Lady the Member for Blackburn, East (Mrs. Castle), when opening the debate, about my absence and also the observations of


the right hon. Member for Leeds, South (Mr. Gaitskell). The hon. Lady complained about my not being here and used language which has been reported to me. I do not propose to waste the time of the House in traversing what she said, but I did ask to be informed when her Clause was called.
I was engaged on rather important duties and, unfortunately, was delayed on my way here. But I did get here for at least 22 minutes of her speech, which, on a Report or Committee stage, is a fair share and I was able to gain an idea of what the hon. Lady had in mind. To those who read our debates I would point out that in missing the first 12 minutes of her speech I did not mean any injustice or underestimate the importance of the issues before us.
The right hon. Member for Leeds, South said that the Government were timid, evasive and extremely disappointing, and that they should have come to a decision already. It is to that aspect of his remarks that I wish to address myself. The position is not at all as he attempted to make out. We understood there was a problem connected with uplift during the debates on the last Finance Bill. I pointed this out to the Grant Committee. I wish to endorse what the Financial Secretary said in paying tribute to the excellent work that has been done by the members who signed both the majority and the minority Reports.
In this connection, I think it a great pity that the right hon. Member for Battersea, North (Mr. Jay) has not taken part in the debate. For once the right hon. Member had an opportunity of being properly briefed on a subject when taking part in our discussions. I know that many of the briefs have been provided by his hon. and learned Friend the Member for Kettering (Mr. Mitchison), his hon. Friend the Member for Gloucestershire, South (Mr. Crosland) and other hon. Friends, but never has there been an opportunity to hear a really good speech from him. We are sorry that he did not take part in this debate owing to his usual modesty.

Mr. Gaitskell: He may do so yet.

Mr. Butler: I trust that he may. In his remarks about the attitude of the Government, the right hon. Member for

Leeds, South asked if I had read the Report. The answer is, yes; I have read the Report. I have studied it very carefully and no extent of public duty would persuade me in any way to go back on the detailed work which must be done in connection with the Finance Bill. Nor will it have any effect on the work I do at the Exchequer.
The right hon. Member said that the trade made representations which may be read in the pages of the Report. To an extent that is correct and one can gain an idea of the attitude of some of the trade to it. But what the right hon. Member did not say was that the trades had not had an opportunity to give their opinion on the majority or the minority Reports.
That is precisely the position in which the Government are today. Not only have the trades not been able to give a final decision on the majority or minority Reports, but we have not yet received sufficient evidence from the trades themselves. In fact, there has been a lack of evidence from the trade as to what their view is since we asked their opinion on the majority Report and the minority Report.

Mr. Jay: Since the right hon. Gentleman is so anxious for me to make a contribution, may I ask him why the Government did not think it necessary to have the comments of traders on the Hutton Report before they made up their minds about that?

Mr. Butler: We very carefully took into account the view of the trade before we came down in favour of the recommendation of the Hutton Report. We took great care to ascertain the position. In this case, we have an extremely complicated situation. I have had a digest made of the evidence from the trade on the majority and minority Reports to date. In my view, that does not represent an adequate sample on which the Government should make a decision.
There is no doubt that a very substantial element in the trade is in favour of the status quo. That is the first section; there is a section in favour of the majority recommendations and a very large section representing retail distributors and multiple shops—big stores and chain stores—who are represented by the view expressed in the minority Report


which is supported in this proposed new Clause. I am not satisfied that we should be right today to come to a conclusion to give up £15 million of public money and accept views as put forward essentially from the point of view of the big stores, the multiple and chain stores. That would be a mistake——

Mr. Gaitskell: The consumers.

Mr. Butler: The right hon. Member says, "the consumers." We understand the motives from which the Clause has been moved and appreciate the importance of the consumer, but we do not think that the evidence given in the speeches of the hon. Lady or the right hon. Member is sufficient to justify us in accepting the loss of £15 million of public money and accepting the Clause as put forward.
We come to the question of whether we could have legislated on the majority Report. In my opinion, the evidence in favour of that is not adequate at present to justify us doing so. The evidence in favour of the status quo is just as strong as the evidence we have received in the last few weeks in favour of the majority Report. Under the circumstances, I do not feel I can take a decision on the evidence before me. That does not mean that we think the matter should be indefinitely or permanently put off. I hope we shall now come to a decision on this Clause and that meanwhile, before next year, we shall be able, on the evidence put before us on the basis of the minority and majority Reports, to come to a decision which is agreeable to the House as a whole.

Mr. Austen Albu: Before we come to a decision on this Clause—and I hope my hon. Friend the Member for Blackburn, East (Mrs. Castle) will press it to a Division—I wish to refer to what my right hon. Friend the Member for Leeds, South (Mr. Gaitskell) said about retailers buying in quantity. We shall probably not get an opportunity of

discussing this matter again before the next Finance Bill and it is very important that the Government should take fully into account this important effect.

It is not only a question of costs of distribution, but the present method of the tax on uplift does, of course, penalise the placing of long-run orders, which is one of the major ways in which we can keep the costs of consumer goods down. In my view, this is by far the most important effect of the present system. I hope the Government will consider this particular aspect very carefully when they are about to make up their minds on the Report.

One could argue from the point of view of the small retailer, and so on, but anybody who regards what has been taking place in retail distribution, particularly in the clothing trade and with women's clothing in recent years, can see what has been the effect of large-scale purchases by retailers direct of goods for which very long-run contracts are placed. This is one of the most effective ways of getting down the cost of consumer goods and, therefore, the cost of living. I do not think we can allow the interests of a group of small shopkeepers to prevent the development of this type of trading, which has been one of the most successful ways of bringing down the cost of living.

Mrs. Castle: With permission, I would make another brief intervention. I appreciate the courtesy of the Chancellor in meeting my request that he should intervene. But, having listened to him, I find that he is in effect doing the work of the Grant Committee all over again, and collecting evidence again, which is an insult to the Committee after all the work which has been done. I am left with the impression that he is trying to collect evidence in favour of doing nothing, and in view of that I propose to press the Clause to a Division.

Question put, "That the Clause be read a Second time."

The House divided: Ayes, 224; Noes. 251.

Division No. 214.]
AYES
[6.31 p.m.


Acland, Sir Richard
Baird, J.
Blackburn, F


Adams, Richard
Balfour, A.
Blenkinsop, A.


Albu, A. H.
Barnes, Rt. Hon. A. J
Blyton, W. R.


Allen, Scholefield (Crewe)
Bartley, P.
Boardman, H.


Anderson, Alexander (Motherwell)
Bence, C. R.
Bottomley, Rt. Hon. A. G


Anderson, Frank (Whitehaven)
Benn, Hon. Wedgwood
Bowden, H. W.


Awbery, S. S.
Benson, G.
Bowies, F. G.


Bacon, Miss Alice
Bing, G. H. C.
Braddock, Mrs. Elizabeth




Brockway, A. F.
Hughes, Hector (Aberdeen, N.)
Pryde, D. J.


Brook, Dryden (Halifax)
Hynd, H. (Accrington)
Pursey, Cmdr. H


Broughton, Dr. A. D. D.
Irvine, A. J. (Edge Hill)
Rankin, John


Brown, Rt. Hon. George (Belper)
Irving, W. J. (Wood Green)
Reeves, J.


Burke, W. A.
Isaacs, Rt. Hon. G. A.
Reid, Thomas (Swindon)


Burton, Miss F. E.
Janner, B.
Reid, William (Camlachie)


Butler, Herbert (Hackney, S.)
Jay, Rt. Hon. D. P. T.
Rhodes, H.


Callaghan, L. J.
Jeger, George (Goole)
Richards, R.


Carmichael. J.
Jeger, Dr. Santo (St. Pancras, S.)
Robens, Rt. Hon. A.


Castle, Mrs. B. A.
Jenkins, R. H. (Stechford)
Roberts, Goronwy (Caernarvon)


Clunie, J.
Jones, Frederick Elwyn (West Ham, S.)
Rogers, George (Kensington, N.)


Coldrick, W.
Jones, Jack (Rotherham)
Ross, William


Collick, P. H.
Jones, T. W. (Merioneth)
Shackleton, E. A. A


Corbet, Mrs. Freda
Keenan, W.
Short, E. W.


Cove, W. G.
Key, Rt. Hon. C. W.
Shurmer, P. L. E.


Craddock, George (Bradford, S.)
King, Dr. H. M.
Silverman, Sydney (Nelson)


Crosland, C. A. R.
Kinlay, J.
Simmons, C. J. (Brierley Hill)


Crossman, R. H. S
Lee, Frederick (Newton)
Skeffington, A. M.


Cullen, Mrs. A.
Lee, Miss Jennie (Cannock)
Slater, Mrs. H. (Stoke-on-Trent)


Daines, P.
Lever, Leslie (Ardwick)
Slater, J. (Durham, Sedgefield)


Darling, George (Hillsborough)
Lewis, Arthur
Smith, Ellis (Stoke, S.)


Davies, Harold (Leek)
Lindgren, G. S.
Smith, Norman (Nottingham, S.)


Davies, Stephen (Merthyr)
Logan, D. G.
Sorensen, R. W.


de Freitas, Geoffrey
MacColl, J. E.
Soskice, Rt. Hon. Sir Frank


Deer, G.
McGhee, H. G.
Sparks, J. A.


Delargy, H. J.
McGovern, J.
Stewart, Michael (Fulham, E.)


Dodds, N. N.
McInnes, J.
Stokes, Rt. Hon. R. R.


Driberg, T. E. N
McKay, John (Wallsend)
Strachey, Rt. Hon. J.


Dugdale, Rt. Hon. John (W. Bromwich)
McLeavy, F.
Strauss, Rt. Hon. George (Vauxhall)


Ede, Rt. Hon. J. C.
McNeil, Rt. Hon. H.
Summerskill, Rt. Hon. E.


Edelman, M.
MacPherson, Malcolm (Stirling)
Swingler, S. T.


Edwards, Rt. Hon. Ness (Caerphilly)
Mainwaring, W. H.
Sylvester, G. O.


Edwards, W. J. (Stepney)
Mallalieu, J. P. W. (Huddersfield, E.)
Taylor, Bernard (Mansfield)


Evans, Albert (Islington, S. W.)
Mann, Mrs. Jean
Taylor, John (West Lothian)


Evans, Edward (Lowestoft)
Manuel, A. C.
Taylor, Rt. Hon. Robert (Morpeth)


Evans, Slanley (Wednesbury)
Marquand, Rt. Hon. H. A
Thomas, David (Aberdare)


Fernyhough, E.
Mason, Roy
Thomson, George (Dundee, E.)


Forman, J. C.
Mayhew, C. P.
Thornton, E.


Fraser, Thomas (Hamilton)
Mellish, R. J.
Timmons, J.


Freeman, John (Watford)
Messer, Sir F.
Tomney, F.


Gaitskell, Rt. Hon. H. T. N.
Mikardo, Ian
Ungoed-Thomas, Sir Lynn


Gibson, C. W.
Mitchison, G. R
Viant, S. P


Glanville, James
Monslow, W.
Wallace, H. W.


Gordon-Walker, Rt. Hon. P. C.
Moody, A. S.
Webb, Rt. Hon. M. (Bradford, C)


Greenwood, Anthony (Rossendale)
Morgan, Dr. H. B. W.
Weitzman, D.


Grenfell, Rt. Hon. D. R.
Morley, R.
Wells, Percy (Faversham)


Grey, C. F.
Morris, Percy (Swansea, W.)
Wells, William (Walsall)


Griffiths, Rt. Hon. James (Llanelly)
Morrison, Rt. Hon. H. (Lewisham, S.)
West, D. G.


Hale, Leslie
Mort, D. L.
Wheeldon, W. E.


Hall, Rt. Hon. Glenvil (Colne Valley)
Moyle, A.
White, Mrs. Eirene (E. Flint)


Hall, John T. (Gateshead, W.)
Nally, W.
White, Henry (Derbyshire, N. E.)


Hamilton, W. W.
Neal, Harold (Bolsover)
Whiteley, Rt. Hon. W.


Hannan, W.
Noel-Baker, Rt. Hon. P. J
Wigg, George


Hargreaves, A
Oldfield, W. H.
Wilcock, Group Capt. C. A. B.


Harrison, J. (Nottingham, E.)
Oliver, G. H.
Wilkins, W. A.


Hastings, S.
Orbach, M.
Willey, F. T.


Hayman, F. H.
Oswald, T.
Williams, David (Neath)


Henderson, Rt. Hon. A. (Rowley Regis)
Padley, W. E.
Williams, Rev. Llywelyn (Abertillery)


Herbison, Miss M.
Paget, R. T.
Williams, Rt. Hon. Thomas (Don V'll'y)


Hewitson, Capt. M.
Palmer, A. M. F.
Williams, W. R. (Droylsden)


Hobson, C. R.
Pargiter, G. A.
Wilson, Rt. Hon. Harold (Huyton)


Holman, P.
Paton, J.
Winterbottom, Richard (Brightside)


Holmes, Horace (Hemsworth)
Pearson, A.
Woodburn, Rt. Hon. A.


Houghton, Douglas
Peart, T. F.
Yates, V. F.


Hoy, J. H.
Plummer, Sir Leslie



Hubbard, T. F.
Popplewell, E.
TELLERS FOR THE AYES:


Hudson, James (Ealing, N.)
Price, Joseph T. (Westhoughton)
Mr. Royle and Mr. K. Robinson.


Hughes, Emrys (S. Ayrshire)
Proctor, W. T.





NOES


Aitken, W. T.
Bell, Ronald (Bucks, S.)
Brooman-White, R. C.


Allan, R. A. (Paddington, S.)
Bennett, F. M. (Reading, N.)
Browne, Jack (Govan)


Alport, C. J. M.
Bennett, Dr. Reginald (Gosport)
Buchan-Hepburn, Rt. Hon. P. G. T.


Amory, Heathcoat (Tiverton)
Bennett, William (Woodside)
Bullard, D. G.


Anstruther-Gray, Major W. J.
Bevins, J. R. (Toxteth)
Bullus, Wing Commander E. E.


Arbuthnot, John
Birch, Nigel
Burden, F. F. A.


Ashton, H. (Chelmsford)
Bishop, F. P.
Butler, Rt. Hon. R. A. (Saffron Walden)


Assheton, Rt. Hon. R. (Blackburn, W.)
Black, C. W.
Campbell, Sir David


Astor, Hon. J. J.
Boothby, Sir R. J. G.
Cary, Sir Robert


Baldock, Lt.-Cmdr. J. M.
Bowen, E. R.
Channon, H.


Baldwin, A. E.
Boyd-Carpenter, J. A.
Clarke, Brig. Terence (Portsmouth, W.)


Banks, Col. C.
Boyle, Sir Edward
Clyde, Rt. Hon. J. L.


Barber, Anthony
Braine, B. R.
Cole, Norman


Baxter, A. B.
Braithwaite, Lt.-Cdr. G. (Bristol, N. W.)
Colegate, W. A.


Beamish, Maj. Tufton
Brooke, Henry (Hampstead)
Conant, Maj. R. J. E







Cooper, Sqn. Ldr. Albert
Hutchison, Lt.-Com. Clark (E'b'rg, W.)
Prior-Palmer, Brig. O. L


Cooper-Key, E. M.
Hyde, Lt.-Col. H. M.
Profumo, J. D.


Craddock, Beresford (Spelthorne)
Hylton-Foster, H. B. H.
Raikes, Sir Victor


Crookshank, Capt. Rt. Hon. H. F. C.
Johnson, Eric (Blackley)
Rayner, Brig. R.


Crosthwaite-Eyre, Col, O. E.
Johnson, Howard (Kemptown)
Redmayne, M.


Crouch, R. F.
Joynson-Hicks, Hon. L. W.
Rees-Davies, W. R.


Crowder, Sir John (Finchley)
Kaberry, D.
Remnant, Hon. P.


Crowdor, Petre (Ruislip—Northwood)
Kerr, H. W.
Renton, D. L. M.


Davidson, Viscountess
Lambton, Viscount
Roberts, Peter (Heeley)


Deeds, W. F.
Lancaster, Col. C. G.
Robertson, Sir David


Digby, S, Wingfield
Langford-Holt, J. A.
Robinson, Roland (Blackpool, S.)


Donaldson, Cmdr. C. E. McA.
Law, Rt. Hon. R. K.
Rodgers, John (Sevenoaks)


Donner, Sir P. W.
Leather, E. H. C.
Roper, Sir Harold


Doughty, C. J. A.
Legge-Bourke, Maj. E. A. H.
Ropner, Col. Sir Leonard


Douglas-Hamilton, Lord Malcolm
Legh, Hon. Peter (Petersfield)
Russell, R. S.


Drayson, G. B.
Lennox-Boyd, Rt. Hon. A. T.
Ryder, Capt. R. E. D.


Drewe, Sir C.
Lindsay, Martin
Salter, Rt. Hon. Sir Arthur


Duncan, Capt. J. A. L.
Linstead, Sir H. N.
Scott, R. Donald


Duthie, W. S.
Llewellyn, D. T.
Scott-Miller, Cmdr. R.


Eocles, Rt. Hon. Sir D. M.
Lloyd, Maj. Sir Guy (Renfrew, E.)
Shepherd, William


Erroll, F. J.
Lockwood, Lt.-Col. J. G.
Simon, J. E. S. (Middlesbrough, W.)


Fell, A.
Lucas, P. B. (Brentford)
Smithers, Peter (Winchester)


Finlay, Graeme
Lucas-Tooth, Sir Hugh
Smithers, Sir Waldron (Orpington)


Fisher, Nigel
McCallum, Major D.
Smyth, Brig. J. G. (Norwood)


Fleetwood-Hesketh, R. F.
McCorquodale, Rt. Hon. M. S.
Snadden, W. McN.


Fletcher-Cooks, C.
Macdonald, Sir Peter (I. of Wight)
Spearman, A. C. M.


Ford, Mrs. Patricia
Mackeson, Brig. H. R.
Speir, R. M.


Fort, R.
McKibbin, A. J.
Stanley, Capt. Hon. Richard


Fraser, Hon. Hugh (Stone)
Mackie, J. H. (Galloway)
Stevens, G. P.


Fraser, Sir Ian (Morecambe &amp; Lonsdale)
Maclean, Fitzroy
Steward, W. A. (Woolwich, W.)


Fyfe, Rt. Hon. Sir David Maxwell
Macleod, Rt. Hon. Iain (Enfield, W.)
Stewart, Henderson (Fife, E.)


Galbraith, Rt. Hon. T. D. (Pollok)
MacLeod, John (Ross and Cromarty)
Stoddart-Scott, Col. M.


Galbraith, T. G. D. (Hillhead)
Macphereson, Niall (Dumfries)
Storey, S.


Gammans, L. D.
Maitland, Patrick (Lanark)
Strauss, Henry (Norwich, S.)


George, Rt. Hon. Maj. G. Lloyd
Manningham-Buller, Sir R. E.
Stuart, Rt. Hon. James (Moray)


Godber, J. B.
Markham, Major Sir Frank
Summers, G. S.


Gough, C. F. H.
Marlowe, A. A. H.
Sutcliffe, Sir Harold


Gower, H. R.
Marples, A. E.
Taylor, William (Bradford, N.)


Graham, Sir Fergus
Marshall, Sir Sidney (Sutton)
Teeling, W.


Gridley, Sir Arnold
Maude, Angus
Thomas, Rt. Hon. J. P. L. (Hereford)


Grimond, J.
Maudling, R.
Thomas, Leslie (Canterbury)


Grimston, Hon. John (St. Albans)
Maydon, Lt.-Comdr. S. L. C.
Thompson, Kenneth (Walton)


Grimston, Sir Robert (Westbury)
Medlicott, Brig. F.
Thompson, Lt.-Cdr. R. (Croydon, W.)


Hall, John (Wycombe)
Mellor, Sir John
Thorneycroft, Rt. Hn. Peter (Monmouth)


Harden, J. R. E.
Molson, A. H. E.
Tilney, John


Hare, Hon. J. H.
Monckton, Rt. Hon. Sir Walter
Touche, Sir Gordon


Harris, Frederic (Croydon, N.)
Moore, Lt.-Col. Sir Thomas
Turner, H. F. L.


Harrison, Col. J. H. (Eye)
Nabarro, G. D. N.
Turton, R. H.


Harvey, Air Cdre, A. V. (Macclesfield)
Neave, Airey
Tweedsmuir, Lady


Harvey, Ian (Harrow, E.)
Nicholls, Harmar
Vane, W. M. F.


Harvie-Watt, Sir George
Nicholson, Godfrey (Farnham)
Vaughan-Morgan, J. K


Hay, John
Nicolson, Nigel (Bournemouth, E.)
Wade, D. W.


Heald, Sir Lionel
Nield, Basil (Chester)
Wakefield, Sir Wavell (St. Marylebone)


Heath, Edward
Nutting, Anthony
Walker-Smith, D. C


Higgs, J. M. C.
Odey, G. W.
Ward, Hon. George (Worcester)


Hill, Dr. Charles (Luton)
O'Neill, Phelim (Co. Antrim, N.)
Ward, Miss I. (Tynemouth)


Hill, Mrs. E. (Wythenshawe)
Ormsby-Gore, Hon. W. D.
Waterhouse, Capt. Rt. Hon. C.


Hinchingbrooke, Viscount
Orr, Capt. L. P. S.
Watkinson, H. A.


Hirst, Geoffrey
Orr-Ewing, Sir Ian (Weston-super-Mare)
Webbe, Sir H. (London & Westminster)


Holland-Martin, C. J.
Osborne, C.
Wellwood, W.


Hollis, M. C.
Partridge, E.
Williams, Rt. Hon. Charles (Torquay)


Holmes, Sir Stanley (Harwich)
Peake, Rt. Hon. O.
Williams, Sir Herbert (Croydon, E.)


Holt, A. F.
Peto, Brig. C. H. M.
Williams, Paul (Sunderland, S.)


Hornsby-Smith, Miss M. P.
Peyton, J. W. W.
Williams, R. Dudley (Exeter)


Horobin, I. M.
Pickthorn, K. W. M.
Wills, G.


Horsbrugh, Rt. Hon. Florence
Pilkington, Capt. R. A.
Wilson, Geoffrey (Truro)


Howard, Hon. Greville (St. Ives)
Pitman, I. J.



Hudson, Sir Austin (Lewisham, N.)
Pitt, Miss E. M.
TELLERS FOR THE NOES:


Hudson, W. R. A. (Hull, N.)
Powell, J. Enoch
Mr. Oakshott and Mr. Vosper.


Hutchinson, Sir Geoffrey (Ilford, N.)
Price, Henry (Lewisham, W.)

New Clause.—(EARNED INCOME ALLOWANCE.)

Subsection (5) of section fourteen of the Finance Act, 1952 (which relates to earned income relief), shall be amended by the substitution of one thousand pounds for four hundred and fifty pounds in the reference to subsection (1) of section two hundred and eleven of the Income Tax Act, 1952.—[Mr. Stevens.]

Brought up, and read the First time.

Mr. G. P. Stevens: I beg to move, "That the Clause be read a Second time."
We regard this Clause as exceedingly important, because it seeks to do something which has not been attempted since before the war. It seeks to give taxation relief specifically and solely to those who direct and manage British trade, industry, commerce and professional life, the


successful administration of which is essential for the benefit of all.
It is true that three post-war Chancellors of the Exchequer, the right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton), the right hon. Gentleman the Member for Leeds, South (Mr. Gaitskell) and my right hon. Friend the present Chancellor have all at one time or another increased the earned income allowance; but in every case a ceiling was put upon the allowance granted. The present ceiling, which is the maximum reached since the war at two-ninths of £2,025, is £450, so that the full earned income allowance can only be attained proportionately by those with earned incomes of £2,025 a year and below.
This relief is unique in that it is limited to those with incomes between £2,026 and £4,500. It is true that those taxpayers who have earned incomes up to £4,500 and above £2,025 have benefited by earlier earned income allowance increases, but they have not benefited proportionately. It is also true that these same taxpayers benefited by the reduction given in this Finance Bill of 6d. in the standard rate of Income Tax; but that benefit went to those in receipt of unearned as well as earned income—a thing with which I entirely and cordially agree but this concession differs in that respect.
I have four groups of reasons for believing that this new Clause is most desirable. Those groups can be stated under four main headings—incentive, saving, common justice and common sense. First, incentive. In the debate during the Committee stage the hon. Member for Sheffield, Park (Mr. Mulley) said:
I am not convinced that any extension of earned income reliefs to those in the large income groups would have any effect on productivity. It would be a very sad thing if it did. If people who are benefiting by earning incomes of £4,000, £5,000 and £6,000 a year are not aware of the pressing need for the utmost productivity, and are holding back because they are having to pay to the Chancellor of the Exchequer what they regard as too much, they have a poor sort of patriotism."—[OFFICIAL REPORT, 11th June, 1953; Vol. 516, c. 543.]
I have an exceedingly high regard for the ability, technical attainments and qualifications of the hon. Gentleman, but I do not think that I have ever heard the point

so completely missed. The question of patriotism does not arise in any shape or form. I can best explain what I mean by a simple illustration. It so happens that it is a factual illustration but, for obvious reasons, I have changed certain details so that the specific case cannot be recognised.
6.45 p.m.
Let us assume that there is a large industrial concern with head offices in London and branch offices throughout the provinces. The general manager, full of years, retires and in the normal course of events the assistant general manager is promoted to take his place. The board of directors then look around the managers of their provincial branches for the man to take the post of assistant general manager. Let us assume that they find what they consider to be a suitable man in the manager of their Birmingham branch, the brightest of all their branch managers.
That man—an excellent fellow coming from Birmingham—is considered by the Board to be the best man to fill the vacancy at head office. Perhaps the salary of the branch manager is £2,000 a year. The board decide to give him a fine increase in view of the responsibilities of the new post, so they offer him £3,000 a year. But he turns it down and says that it is not good enough, not because of any lack of patriotism but for good sound material reasons. Apparently he would get a gross increase of £1,000 a year, or 50 per cent. of the salary that he is getting.
But then my right hon. Friend the Chancellor comes along and takes away from that £1,000, because the man will have exhausted all his personal allowances: 9s. in the £ for Income Tax, 2s. in the £ Surtax on the first £500 and 2s. 6d. on the second £500. The total tax the man would have to pay from his additional £1,000 would be £562 10s., very much more than half, to leave him with a net increase of £437 10s. That may seem reasonable. He would have £8 a week extra in cash; but what does he have to meet for that extra £8 a week? First he has to leave the house which he may have in the suburbs of Birmingham at Sutton Coldfield or somewhere like that, and he has to find—somewhere in the suburbs of London, in


Wimbledon, Putney or Hampstead, or wherever it may be—a house suitable for himself, his wife and family. It must be a house suitable to the post of assistant general manager of a large industrial concern.
That will cost at least £100 a year more with very little real gain. In addition, he will find travelling expenses greater. He will find that it will cost him more to eat. His amusements will cost him more. At least another £100 a year will go on things of that sort with no real benefit or advantage to himself. He will be left with about £5 a week in cash with which to maintain the greater dignity of a more senior post and as a reward and return for giving up those amenities which he, his wife and family may have known for perhaps 40 years or more, and trying to start life again in a new and different district.
We cannot blame the man who says, "No, thanks very much. I am quite happy where I am. Five pounds a week is not a sufficient inducement to make me go to London to this larger and more important post." The consequence is that, instead of the best man for the job being appointed for the post of assistant general manager, the board has to go to the second best and industry suffers. It may be an exporting industry and then the result is that the country suffers as well.
I do not know why right hon. Gentlemen opposite are grimacing. I have never found that grimacing is a good substitute for argument.

Mr. Gaitskell: We were wondering from which part of the country the second assistant general manager would come.

Mr. Erroll: Leeds.

Mr. Stevens: My hon. Friend says Leeds. I think it is very possible; it is quite a reasonable suggestion.
I do believe that decreasing differentials are a tragedy. They have been for a number of years, and craftsmanship and standards of management will suffer if it is not worth a man's while to make these sacrifices on leaving his familiar and happy home ground, and if it is not worth a man's while to weary himself with the extra care and strain demanded by craftsmanship or the extra responsibility

of more senior management, but that is the position we have reached today.
Secondly, savings. As far as savings are concerned, it is true that, however much real wages rise and standards of living may improve, the lower income groups will always be the marginal livers, and will not be able to save, the reason for that being that improved standards derive from increased prduction, which, in turn, means that the desirables of today become the necessities of tomorrow. Therefore, we have to turn to the higher income brackets for individual savings, and it is debatable whether individual saving is desirable. Indeed, the right hon. Gentleman the Member for Dundee, West (Mr. Strachey) has views on that subject, because, in that same debate on 11th June, he said:
It does look as if under the old rate of taxation, very high indeed compared with our traditional rates, it was possible to produce by various means, Budget surpluses and the like, an adequate degree of saving for the purposes of real capital accumulation."—[OFFICIAL REPORT, 11th June, 1953; Vol. 516, c. 496.]
I think that is a most dangerous half-truth. It is perfectly true as far as it goes, but it does not go far enough, for the simple reason that it entirely overlooks the human factor and the long-term result. I believe that the saving habit—what my father used to call thrift, which is a word we do not hear very often these days—is a valuable feature of a man's character. I believe that, if we take away a man's ability to save, his desire to save will also be lessened.
The right hon. Gentleman the Member for Dundee, West, in the same speech, also said that business was mostly run by limited companies. I am not sure how far he was right in that comment. There is a surprising amount of business in this country which is still carried on by unincorporated bodies, such as partnerships and firms, so that it is not entirely true to say that, in all cases, the limited companies are running the business of the country. They are acting as entrepreneurs. It is the directors who "entreprenne."
If it is the case that the director is a man who is a spendthrift in his private affairs, he will also be a spendthrift in the company's affairs, and, if he is, the company's savings will dwindle and so will vanish the Budget surplus and the national capital accumulation. The income groups which this new Clause will benefit have


not lost the desire to save, and, so long as that remains, the National Savings of the present will be the national capital of the future. Unless the ability to save is restored before very long, the desire to save will fade away.
Thirdly, common justice. Certain pseudo-economists whom I know have said and still say that it is the workers who create the wealth of the world. [HON. MEMBERS: "Hear, hear."] Of course, hon. Gentlemen opposite say, "Hear, hear." They would say "Hear, hear," if I said that, unless a motor-car had four wheels, one at each corner, it would not move along the road, and that is very true, but even that motor would not go far unless it had an engine, in exactly the same way as a wheel-less car with an engine would not go very far. Both workers and managers are essential, and, whereas the workers have, in the last six post-war Budgets received incentives from those Budgets in the shape of tax reductions, I think it is common justice to suggest that the time has come for a proportionate concession to be made to the management.
The last heading is common sense. It is often said that we are living in the days of the managerial State, and there is no doubt a good deal in it. If that is true, surely, we need the best possible management, and, unless we pay those managers well, we shall not keep them in this country, unless we put an iron curtain round the country. No one benefits more from efficient management than the workers, so that it seems to me to be plain horse sense that we should take active steps to see that we have the best management.
Now one word on the cost of the concession. Obviously, I can only hazard a guess, but my guess is that the cost of this concession would be something of the order of £15 to £16 million. I agree that that is a substantial sum, but it is very much less than the very large sum involved in the concession to which we on this side are very much looking forward to in due time—a further reduction in the standard rate of Income Tax by 6d. or by 1s. 6d. That would be much more desirable, applicable to unearned as well as to earned income, but it would cost far more than my right hon. Friend can possibly spare this year, although we hope that, by reason of the

success of his policy so far, next year we may see the realisation of that hope.
This concession may well cost about £16 million, but I believe it would be cheap at the price, because I think that the urge and stimulus which such a concession to the managers of the country would produce would result in such a leap in productivity that, in a very short time, the Chancellor would reap more than that £16 million from the taxation on increased profits which would accrue.

Mr. Erroll: I beg to second the Motion.
This new Clause proposes to place in the hands of certain moderately well-to-do people rather more spending money than they would get without it. I share the apprehensions which hon. Members opposite may feel—if a man cannot live well on £2,000 a year, why should he be given any more? Surely, they would say, he ought to be able to do his job on £2,000 a year when so many millions of people have to do their jobs on only £400 or even less a year.
I fully understand, and, in part, sympathise with, the feelings of hon. Members opposite, and I think they spring from deep and sincere origins, but I cannot agree with the equalitarian tendency which has been shown so clearly in the last two years by hon. Members opposite, because I think we are beginning to see in this country that it does not work out in practice, and we are essentially a practical country.
I have noticed that hon. Members opposite, both inside this Chamber and outside in the country, have frequently pointed out the essential need to reward a man for the job he is doing—the man at the bench, the man behind the plough and the man in the mine. In fact, it was a Labour Chancellor of the Exchequer who altered the rates of Income Tax in such a way as to reduce the incidence of Income Tax on those people getting overtime pay, because it was quite fully recognised that, if a man at the bench or in a mine was doing extra work, he ought to be able to keep a bit more of the extra reward which he earned.
If that principle holds good, and I am sure that all of us agree that it does, for men who toil with their hands, it surely must be accepted that it is a principle which holds good for those who


toil with their brains. I know that toiling with one's brains looks cushy to the man who toils with his hands, and, if I was getting my hands dirty by working, I should think that the manager was having a cushy time in his office. Some of them do have a soft time, but many more tire themselves out in a harder way than the man at the bench. There are probably more deaths among general managers at an early age than there are among men who work at the bench.
7.0 p.m.
If hon. Gentlemen opposite accept the principle of an increased retention of reward for manual or clerical workers in this industrial country, they ought to accept it for the salaried or managerial classes. It is not practical politics to say to a man who is a manager and is actuated by very much the same motives as the man who works in a lower status in the organisation, "The more you earn gross, the less you are to be allowed to keep." Human nature being what it is, he tends to ease off. He is not being unpatriotic. He says, "It's not worth the candle. Why should I wear myself out with extra work and responsibility if I can't keep a little of what I earn?"
It concerns not only himself but his wife and family. He has to make the choice between working extra hours, taking on greater responsibility, and perhaps more travelling, greater enjoyment and pleasure with his wife and family. He has the same feeling as some engine drivers who resist having to spend time away from home, even though they get overtime. A salesman may have to go abroad and be away from home.

Mr. Jack Jones: When a salesman gets his expenses paid for doing a job abroad it is very unusual for those expenses to be shown in his Income Tax declaration. The driver of an engine gets his expenses in his wage packet and they are shown every week in his P.A.Y.E.

Mr. Erroll: As a matter of fact, this Conservative Government have just introduced a new form upon which expenses are shown, and as the result of it sales managers who go abroad will, in the normal course of events, have to show those expenses. They will be assessed to tax unless it can be shown

that they have been wholly and necessarily incurred in the course of his duties. There is very little difference between their position and that of the sales manager. If the sales managers did not go abroad there might not be so many goods for the engine drivers to pull about in this country.

Mr. Frederick Gough: This subject is very important. I know of many cases of sales managers going abroad. When it comes to assessment they often get assessed on the savings they made in their housekeeping by going abroad. I know of many such cases.

Mr. Enroll: I am very grateful to my hon. Friend for making that point.
I do not want to be diverted on to the subject of the expense allowance, although I shall be very glad to argue with the hon. Member for Rotherham (Mr. Jack Jones) at any time. The point I am making is that increased effort deserves an increased retention of the reward and it is no use insisting upon it in one case without agreeing to it in the other. If the equalitarian attitude of hon. Gentlemen opposite prevents the highest salaried workers from retaining an increasing share of their earnings the result will be what we all deplore, a preference for leisure rather than earnings which men cannot retain, particularly among the men at the top.
Such a man may say, "I hope that the money which I earn, and which is taken away from me in taxes, will be spent with the same care as I earned it. In the choice between leisure and hard work he may choose leisure because there is no reward to be gained in extra work. On the other hand, if he is of energetic disposition, he may say, "I will pack my bag and go abroad where I can not only earn money but can keep a bit more of it for myself." It is all right here provided one does not earn more than about £600 a year. As soon as one starts earning at the £2,000 or £3,000 a year level one is supposed to go on working indefinitely for a decreasing reward.
Our proposed new Clause seeks to remedy that state of affairs in a small way. I hope it will be received by hon. Gentlemen opposite with sincerity, as it is intended as a sincere contribution to a better life for Britain.

Mr. Roy Jenkins: The two hon. Gentlemen on the Government side of the House have advocated this new Clause with great correctness. The hon. Member for Langstone (Mr. Stevens) drew a most effective picture of the type of person who is to be allowed this concession. He spoke rather as though this particular group of people were left out from the Budget. As a matter of fact, this group more than any other group in the country have already done well out of the Budget.

Mr. Stevens: I am sure that the hon. Member would not like to misquote me. I said that they had proportionately been left out. That is a most important word.

Mr. Jenkins: With a cut of 6d. in the standard rate I would say that people at about £3,000 a year—the people concerned—have done very well both absolutely and in proportion to their total incomes. Their net income has gone up a great deal more than that of most other classes, so it can be assumed that we are dealing with people who have already done very well out of the Budget.
The hon. Gentleman's argument contained a non sequitur. He said that we wanted the best people to take the vitally important jobs and that we should not get them if the rewards left in their hands were too low. My right hon. Friend the Member for Leeds, South (Mr. Gaitskell) took the hon. Gentleman up upon a logical fallacy and asked why the second-rate people then took the jobs. Surely it could not be argued that the second-rate people are less affected by financial considerations and more attracted by responsibility than are the first-rate people. I should have thought that it was the other way round.

Mr. Stevens: Does not the hon. Gentleman think that the second-best men normally have second-rate judgment?

Mr. Jenkins: I do not quite follow that argument, unless it is to suggest that second-rate men cannot work out their tax liability in advance. All the responsible jobs are filled by somebody. It cannot be argued that a great number of highly paid jobs are open for many months of the year from inability to get people to go into them, either first-rate or second-rate people.
The hon. Gentleman's next argument was that the proposed new Clause would

help savings. That is a bit contradictory. He argued the case with great force of somebody accepting much more responsibility with his salary raised from £2,000 to £3,000 a year—about £450 a year net—and referred to the expenses in which this man would be involved in getting a new house, etc. The result was that he could hardly manage. If we are by this proposed new Clause to help people who cannot manage and who desperately need money I cannot see how they will be able to save money. That is the difficulty in which the hon. Gentleman is placed. On the whole, I would have hoped that the Government would not accept the Clause.
There is a great deal to be said, as we argued during the Committee stage, for increasing the reliefs for earned incomes; but if the Government took the view—falsely as, I think, they did—in Committee that they could not accept the Amendment then moved by my right hon. Friend the Member for Bishop Auckland (Mr. Dalton), not merely to increase the limit, but to increase the amount for earned income relief throughout the whole scale, I think it would be highly undesirable to accept the Clause, which, as its sponsors have frankly said, would affect only those in an income range of between £2,025 and £4,500 a year. It would be quite wrong to accept the one without having accepted the other.
We were told that the Clause would cost only £15 million a year, whereas my right hon. Friend's Amendment during the Committee stage would have cost something like £50 million. This is, of course, a lesser figure, but, even so, £15 million is a great deal of spend each year on such a limited number of people as there must be within this income range.
If hon. Members on the other side are sincere, as, I have no doubt, they are, in their anxiety to help people with earned incomes as opposed to those with unearned incomes, it would be much more desirable to think in terms of a complete split between the standard rate of Income Tax on earned income and that on unearned income. That, it seems to me, would be a logical and helpful move.
At the present time, when we have a standard rate of 9s., we have a position in which people think they are paying more Income Tax than they are, in fact, paying. Nobody on an income of up to £2,000 a year pays tax at the rate of


more than 7s. in the £. It would be much better to have the standard rate at 7s. in the £ and not to have any of this 9s. nonsense, which is psychologically disadvantageous in many ways. In addition, once the two rates were split, we could look at them independently of each other, and this also would be a great advantage.

Mr. Ian Horobin: At this stage of the Finance Bill I do not want, even on such an important Clause, to occupy very much time, and I shall concentrate briefly on one point. Before doing so, however, as the hon. Member for Stechford (Mr. Roy Jenkins) has endeavoured to convict my hon. Friend of illogicality, I may, perhaps, be forgiven for entering for a moment into the kindergarten stage and answering the point which he has made.
The hon. Member seems to have omitted the sad possibility that the second-rate man may take the job, realising that he will not be paid very much for it, with the full intention of not doing all the work that the first-rate man would have done, by deciding that if he expended that amount of energy and took on all that amount of work and responsibility, the game would not be worth the candle. Unfortunately, that is much too common in this sad world today, when jobs are being filled by people who are not really giving of their best, either because they cannot give what is required or because, although they could, they do not. That goes for all sections of society, and not only for the £2,000 to £5,000 a year man. That is the simple and sad answer to the hon. Member's remarks.
It is not really necessary to take a great deal of time on arguing and disputing what the Clause is intended to do. It is intended to help the managerial £2,000 to £5,000 a year man. There are people on the other side of the House who are prepared, at any rate, when it suits them, to pretend that that kind of man is not, apparently, even a worker within the definition. Hon. Members opposite are prepared to assume, contrary to all the evidence, not only in this country, but even in countries like Russia, that we can get that kind of rather scarce and very valuable work done by people for the same amount of money as we can get much

commoner work done. We cannot. All experience is to the contrary. Therefore, it is not really worth while from a practical point of view arguing whether those people need to be paid or whether their contribution to economic welfare is important, for it obviously is. They really hold the key to our industrial future.
7.15 p.m.
We can discuss the position of those men without in the least going into the wider issues of getting rid of great differences of wealth. We are not talking now about millionaires, or whether they ought to have money taken away and give to the wage earner. These men are a class of people who on no sensible description can be called the idle rich or the wealthy. They are the sort of people, incidentally, who, throughout the whole of their income, spend far more in doing for themselves what other ranks of society expect to be done by the ratepayer and by the taxpayer.
The whole point at issue is whether it is desirable to help those people more than they have been helped recently, and to help them only in the sense of leaving them a little more of the money that they themselves earn. For my part, and, I think, for the part of most people on this side of the House—and, I honestly think, a good many Members on the other side—there is a good deal of feeling that as and when it can be done, those people should be helped by tax reliefs.
This is the simple point I want to make to my hon. Friend the Financial Secretary. This proposal would cost some money. I do not know whether the figures that have been suggested are accurate, but the cost, obviously, would be substantial. If it was not, it would be no use. The whole point is that we are endeavouring to leave in the pockets of these people, on the grounds of equity and incentive, a substantial amount of the money that they earn.
If the Financial Secretary says that the Chancellor of the Exchequer has given away all the money that he has to give away this year and we cannot afford this proposal, then that, in this Budget, settles the issue for me. I felt already—I have said so during these debates—that the Chancellor has, if anything, gone to the limits of what he could safely afford and that it would be an ill service for this or


any other section of society if we did anything which encouraged a return to inflationary tendencies.
If my hon. Friend simply says that this proposal is excellent but that the Chancellor cannot afford it this year, well and good. I hope, however, that he will feel able to say, if he cannot accept the Amendment this year on that ground, that he has no other ground for refusing it and that he will give a sympathetic consideration among the highest priorities when, in the development of the so far so successful financial administration of our affairs by the present Government, it is possible to give further reliefs.
There are few directions in which the real wealth produced in this country, for the benefit of all sections of society, could be more quickly increased than by relieving somewhat the burden upon the key section, the people who have to go out and get the orders, who have to compete with their counterparts in Germany, Japan and the United States, this section of society who, in the economic world, really are key men, just as much as—in some ways more than—some of the highly skilled craftsmen, whose wages, as we all rejoice to know, have in recent years been well advancing to the level of those in any other country.
The incomes of what we would, roughly, call the managerial section—this £2,000 to £5,000 section—have not been increasing; they have been falling back in the race compared with other countries. I believe that not only to their own advantage, but to the advantage of the firms that they run, and, therefore, to the advantage of the people they employ, there are few sections of society where reliefs of this kind could be invested in efficiency to greater advantage. Therefore, I very much hope that the Financial Secretary will be able to say that, if not this year, earnest attention will be given next year to the possibility of making some such relaxation in their burdens.

Mr. Jack Jones: I should have hesitated to enter into this debate except for the speeches made from the opposite benches. I was almost reduced to tears when I heard the story of the man who came to London and found himself in a better house, in better surroundings and with more responsibility, but that he did not have quite as much money as he had

expected, although he still had an increase compared with what he had been getting and the opportunity to serve the country in a higher and more effective sphere.
These statements that we have had from the other side are a slander on the managerial classes. They are a slander upon them in this respect. We have been told illogically—I use ordinary workmen's logic in these discussions when I can—that if the Financial Secretary or the Chancellor were to accept this new Clause, immediately it became operative the production of this country would receive a tremendous upsurge. That is utter nonsense. If that is true the managerial section of the country stand indicted for not having done for the country what they should have done during the last few years, and particularly since the Tory Party have been in power.
It is wrong to suggest that all those engaged in industry look upon financial reward as the be all and end all of what they ought to do in industry. I speak as one who has been paid an incentive bonus for the whole of my working life. Every additional ton I produced was paid for at a less rate than the ton prior to it. Every ton over 200 and up to 3,000 was paid for at a less rate, but the aggregate wage earned was greater and the satisfaction I got was that I did a better job for my company and for my country. By the brown book agreement ·004 of a penny is deducted for every ton over a certain amount.
The suggestion that sufficient financial reward will get us out of our economic difficulties is completely wrong. Reference has been made to the case of a man who was invited to come from Birmingham and take a job in London. He has proved that he is the best man for that type of job and has already given to his company and to his country the highest possible service. He and others like him are the sort of fellows we want these days of economic stress and strain—not the person who, because of advantages derived from a Clause of this sort, says "I shall get more than I have been earning and I shall be able to take things easy." That is the way to get less production.
I know the difficulties of this section of the wage earning group. All this talk about these people not being workers is nonsense. All managers are workers. The


chairman of directors of the company for which I worked was not looked upon as a fellow who did no work just because he did not wheel a barrow or mix cement. We realised that he was a man who was working in a different sphere and that without him we would not have got very far, and of course without us he would not have been needed at all.
I know that if the Financial Secretary could be induced to believe by any stretch of the imagination—and he is not much of an imaginative person; he is very factual as a rule—that the acceptance of this Clause would increase production, he would certainly accept it. The suggestion that financial reward is the only inducement may sound all right, but it is not true. I wish people would stop condemning those persons in that sort of job as being the type who would have done better if they had been paid more in the past. It is wrong and it does not help the country to suggest that the managerial section are not doing what they could or should. We have had from the benches opposite today a slanderous statement, and it is wrong.

Mr. Frederick Mulley: I agree with my hon. Friend the Member for Rotherham (Mr. Jack Jones) that this is a strange debate in which we on this side of the House have to defend the managerial classes earning between £2,000 and £4,500 a year from the serious attacks that have been made on them from the benches opposite. I believe that there are some who are not doing as much in their various capacities as they might, but I would be very surprised to learn that this lack of a sense of responsibility is as widespread as has been suggested.

Mr. Jack Jones: It is slanderous.

Mr. Mulley: I do not object to the distinction which is made between earned and unearned income. There is a good deal in the statement of my hon. Friend the Member for Stechford (Mr. Roy Jenkins) that if there is to be a further remission of taxation it should be in the earned rather than the unearned section.

Mr. Ralph Assheton: Does the hon. Gentleman refer to earned income as income that has been earned in a certain year, or does he also

refer to income which has been earned in the previous years and put aside?

Mr. Mulley: I do not want to go into the whole question of taxation on pensions and that sort of thing. I do not want to go into the peculiar position of barristers, although I understand they use this argument to some personal advantage. From the point of view of the Revenue, one has to take income earned in a particular Income Tax year. The Financial Secretary does not often agree with me, but I think he will agree that there would be considerable administrative difficulties in trying to get any other basis of assessment.
The point that I am making is that we cannot have this kind of reduction in taxation as well as a reduction in the standard rate. I understood that the thon. Member for Langstone (Mr. Stevens) who moved the Clause wants both. He wants remissions in the standard rate and at the same time he wants an extension of earned income relief.

Mr. Stevens: Is the hon. Gentleman referring to this year only or to next year? If there is a choice next year between a reduction in the standard rate or an increase in the earned income allowance, I do not think there will be any difficulty at all in choosing the standard rate.

Mr. Mulley: The hon. Gentleman is being frank. Those who speak for the unfortunate people earning between £2,000 and £4,500, should decide whether their £15 million should have prior claim to the £100 million which would go to companies if the standard rate were reduced by 1s. 6d. He should get his sense of priorities right. We on this side of the House would prefer, if there were to be a large reduction in taxation, that it should go to earned income rather than to unearned income.
I find it difficult to follow arguments based on incentives in this matter. An argument has been based on a gentleman in Birmingham. I shall not deal with it at length, but I would say that it is fortunate for the country and for the companies concerned if men of that character do hold back in Birmingham instead of taking jobs in London for an additional £1,000 a year. Clearly those people have no ambition, drive or anything else. If it is put to me that a


man will not take an assistant manager's post with the prospect of becoming a general manager and receiving further advancement of £450 a year net as well, he is not the kind of man we want in any managerial position.
It seems odd, after hearing in these platitudinous debates about the virtues of private enterprise, that a man will not take a risk for £450 a year. What kind of money do we have to pay people in order to get a sense of adventure back into private enterprise again? If hon. Members opposite really believe in the case that they have put forward today in support of this Clause, they ought to join this party and say that we are too slow in dealing with private enterprise. There cannot be any enterprise left.
I know of many people at the lower managerial and working foreman level, who have taken promotion at a gross financial sacrifice in order to further their earning capacity in the future. If that attitude is prevalent among the charge hand and foreman level, it is a pity that those people are not promoted to the £2,000 and £3,000 a year jobs because they have the outlook that is wanted in a managerial community.
Is it supposed that by spreading £15 million among the managerial class we can make them work so much harder, when every one knows of the great need of this country for production and increased exports, which is preached repeatedly throughout the year by the Chancellor and the President of the Board of Trade, who incidentally I am glad to see in his place.
If that were the case the £15 million would be well spent, but what a terrible indictment of those people it would be, an indictment which I am sure is not justified. There may be odd characters here and there to whom the indictment applies and hon. Members opposite have the advantage over me of probably knowing such people, but I do not believe that the number is very great or that it is right to say that £15 million is required to buy them so that they will work for the national good as a result of having this additional advantage.
7.30 p.m.
I would say to hon. Members opposite what was said to me by an American who was a fairly shrewd observer of the industrial scene in this country. He said, "The lower management levels in British

industry are very good, but the trouble with your management people is that they work only to get an expense account and when they get it they are so busy entertaining their friends and reciprocating hospitality that they do not have time for management."

Mr. Horobin: Will the hon. Member tell us how much his American friend was earning?

Mr. Mulley: I did not ask him, but certainly I think that he would have put as a priority in obtaining more production from managers the abolition of the expense account rather than putting up their earned income relief. If, however, hon. Members opposite would go so far with us as to support the abolition of the expense account we might go some way with them in supporting further Income Tax relief for this income group.
I do not believe necessarily that if people have the prospect of a larger net income they will want to earn more. There are many people who want a standard of living which is beyond their actual net income, but it may well be that in fields where their income is directly related to their energies, such as in the case of barristers, they might work less if they are able to maintain the standard to which they are accustomed without need to make extra effort. Therefore, half of this proposed expenditure of £15 million might go to people of that kind and the net effect would be a disincentive rather than an incentive to extra work. I therefore ask the Financial Secretary to the Treasury not only to reject this Motion this year but to use such influence as he has in the Treasury so that this proposal is never put forward either as an incentive or as a measure of social justice.

Mr. Stevens: Has the hon. Member ever studied the figures of emigrants from this country, and has he ever asked any of those emigrants why they were going out to different countries, and have any of them, in all income brackets, by any chance said, "To get higher real wages"?

Mr. Mulley: I have never stood on the dockside to take a Gallup poll, but if people will not come to London for an extra £450 they will hardly go to the Dominions.

Mr. Jack Jones: I have asked them and very often they have said, "I was denied an opportunity in this country owing to nepotism and other reasons."

Mr. Erroll: The hon. Gentleman did all right.

Mr. Jones: Yes, because I worked damn hard.

Mr. John McKay: I am surprised that any body of men should press a Motion which is likely to involve the Government in about £20 million of extra expenditure without putting forward some very strong argument in its favour. If we are in such a good position that the Government can afford to give about £20 million to any particular section of the community, one ought to ask what class of people should receive that benefit. If any argument has been put forward in this debate at all, it is that this proposal would be a good thing because it would be such a great incentive to the managerial class in this country and because, as a result of that incentive, something extraordinary would happen to the productive power of the country.

Mr. Jack Jones: What nonsense.

Mr. McKay: I think that my hon. Friend the Member for Rotherham (Mr. Jack Jones) dealt with that fairly emphatically. This proposal is a strong public condemnation of the people whom it is supposed to benefit. We have about 200,000 people in the managerial class in this country who receive high salaries and who have already received an incentive of at least £100 each in Income Tax relief this year. These are the people who want the workers to produce more and to put more energy into their work when those workers can hardly live on the money which they receive.
Like the old woman with the poker, I want to show what side I am on. If there are £20 million to give away I, like many others, believe that it is all wrong to offer it as an incentive to the managerial class, to men who go to their offices usually about 10 o'clock in the morning and then have about two hours for lunch and come away at about 5 o'clock. If a census were held and a close scrutiny made I do not suppose that it would be found that these

men do more than 30 hours of real work a week. If we do have more production it will be because we have more men and material and machinery, and the men in managerial positions will merely direct the work as usual. As long as the labour power is used in a business-like way what we need for more production is not more incentive but more labour and machinery.
If and when we can consider giving away money and giving people relief we should look to the people who most need the relief. The Income Tax returns show that there are about 200,000 married people, with two or more children, who earn less than £5 a week. In the next income group there are about two million married people, with two or more children, whose average income is about £6 17s. a week. They are part of a middle-income group numbering nearly 10 million. It is estimated that it takes at least £7 7s. to provide a very low standard of economic life to a family of man and wife and three children.
In view of these facts, the proposal embodied in this Motion indicates that hon. Members opposite are not particularly anxious to raise the standard of life of the common man. In all their suggestions they are continuously trying to give more to the people who already have the money. There can be no question of supporting this new Clause.

Mr. Houghton: We ought not to decry the value of the work of our managerial classes. We must keep this question in proportion. It was a pity that the hon. Member for Langstone (Mr. Stevens) introduced the factor of incentives into his reasons for urging this additional relief. I do not believe that the cost to the Revenue would pay for itself in an increase of the national product. It is a tribute to the persons who would benefit under this Clause to say that they will go on working just as hard and as skilfully, and with just as much desire to help the country as well as themselves, whether or not we pass this new Clause.
I have had wide experience in the public service. It may be that rewards are more modest and standards of public duty are higher in the public service than outside; I would make no extravagant claim for that; but long experience has shown how rarely any person refuses


advancement on account of economy or the domestic disturbance which follows that advancement. How many Members are dissuaded from coming here because it will cost them money to serve as Members? The truth is that men cannot resist enhanced esteem, prestige and power. Their wives cannot understand this. Many of them think that the game is not worth the candle, when they find their husbands are willing to pack up home, move long distances and take on additional responsibilities for a modest increase in remuneration and probably a net reduction in their standard of life.
I remember an officer in the Inland Revenue service—which is highly mobile—who was transferred from Northern Ireland to London. When all the consequences of that transfer, following his promotion, became visible to his wife, she said, "Look here, do not have any more promotions of that kind, because we are worse off after your promotion than we were before." But nothing will stop the ordinary man with vitality, ambition, and a desire to succeed, from wanting to do better. Nothing will dissuade him from enduring sacrifices in order to achieve his ambition.
The hon. Member for Langstone did a dis-service to the managerial class when he suggested that a relief costing £16 million to the Revenue would pay a dividend to the nation. We must rule out that suggestion. There is no question of principle involved. If we differentiate between earned income and unearned income for taxation purposes, I suppose there ought to be no limit to the point in the scale of earned income at which relief should stop. But it has been a feature of this form of earned income relief that there has been a limit to the amount of tax conceded. It is higher now than it has been for a dozen years, at least, and the amount of the relief is also higher than it has been previously.
7.45 p.m.
We are in favour of giving reasonable relief, from Income Tax to earned income. That was shown in the Amendment we moved during the Committee stage, to increase the earned income relief from two-ninths to one-quarter, though we proposed to retain the existing ceiling to the relief, which this new Clause seeks to raise. We have to accept the fact

that, in addition to the principle of differential rates of tax between earned and unearned income, there is another principle of fair distribution of the burden, and we have to harmonise the two.
There is probably no reason, in theory, why the Chairman of the Board of Inland Revenue should have half his earned income treated, for tax purposes, as if it were unearned income, whereas a subordinate officer, such as an assistant secretary in the same Department, has his whole income treated as earned income. There is no justification in principle for that differential. It exists because we have regard to the other principle of a fair distribution of the burden.
There is one point about earned income relief which is anomalous. Where a husband and wife are both working the same ceiling applies to both their earned incomes. I cannot see any justification for that. Where a man has earned income, his wife is in a job, and the two incomes, taken together, exceed the maximum amount to which the relief applies, there is a very aggravating entry on the P.A.Y.E. coding notice, called "Earned Income Relief Restriction." It is not easy to see why a wife's earnings should reduce the earned income relief of the husband, but that is one of the compromises between the principle of the relief itself and that of a fair distribution of the burden.
I must comment upon the suggestion made by my hon. Friend the Member for Stechford (Mr. Roy Jenkins), who raised the question of a differential rate of tax as between earned and unearned income, as distinct from the form of earned income relief that we have at present. His proposal would raise some administrative nightmares. The present method of allowing one income relief is undoubtedly the most convenient from an administrative point of view. I know that administration must not govern our desire for an Income Tax system that can be fully understood and is fair in its operation. I fully acknowledge the fact that many people mis-read their Income Tax notices and believe that they are paying at the highest rate of tax when, in fact, the earned income relief reduces the effective rate of tax, as is always shown in the tables in the Financial Statement at Budget time.
No one pays at the standard rate of 9s. in the £ on any of his earned income. Earned income relief reduces the standard rate to a lower effective rate in all cases, and in some cases to a greater extent than others. I do not fall for the suggestion of my hon. Friend that, merely for the sake of clarity in the minds of the taxpayers, we should introduce further complications not only into its administration but into the intelligibility of the tax from the point of view of the taxpayer.
I want to clear up two misunderstandings which appeared to creep into the speeches of my hon. Friend the Member for Rotherham (Mr. Jack Jones) and the hon. Member for Horsham (Mr. Gough) Do not let us make Income Tax worse than it is. When a subsistence payment is made for a lodging turn, or for absence from home on business, that subsistence allowance is not taxable. I am astonished that the hon. Member for Horsham knows of cases where business men going on business trips abroad have had their Income Tax assessment raised on the ground of the hypothetical saving in domestic expenses at home. There are many complexities about these things and many anomalies, but those two matters are, happily, not part of them.
I think the sum and substance of it is, as the hon. Gentleman the Member for Langstone said, how much relief we can give to this group of taxpayers this time beyond that given already by the reduction in the standard rate and beyond the increase in the earned income relief given last year? Whether the ceiling of this relief should be carried further still, whether the amount of earned income relief should be further increased, are matters which have to be brought into the general balance of taxation when a fresh review of the whole situation falls to be made. At the moment, however, I am sure that the hon. Gentleman the Member for Langstone would not press his new Clause upon the House, because if he did, as I am sure he will not be surprised to hear, we should not support him.

Mr. Jay: Just in case the Financial Secretary has not yet made up his mind, I would advise him not to accept this Clause. The hon. Member for Langstone

(Mr. Stevens), not, I am sure, a place from which second rate men come, put forward a persuasive argument on what is a very serious question. He wants quite openly and explicitly to give help to the class of people whose earned incomes are between £2,025 and £4,500 because he regards the managerial and other professional workers whose incomes come within those brackets as highly important and valuable members of the community.
We believe that it is desirable, other things being equal, and in its due priority, to make a reduction of direct taxation on earned incomes, and we should not wish to exclude from such reductions altogether those very important workers who fall into the bracket that the hon. Gentleman had in mind. But we do think that a reduction of this kind should not be confined to those whose incomes are above £2,000 a year, certainly at a time when they have already benefited more than most people from the reductions in tax that have been made in the Budget already.
I agree with the hon. Gentleman that I should have preferred the Chancellor to have made this change than to have made the positive differential in favour of unearned income that he did as a result of the changes he made in the Budget. I would also recall, what, I think, the hon. Gentleman did mention, that in the various Budgets of the Labour Government earned incomes of this kind did benefit on quite a number of occasions. I do think, however, that the hon. Gentleman fails to make his case when he now wants to confine his reduction to those with incomes above £2,000 a year.
Indeed, how confused the position of hon. Members opposite is on this matter of the earned income allowance. In the Committee stage they voted against and defeated our proposal to put the proportion at a quarter rather than the present two-ninths. The effect of that would have been to have helped everybody most of the way up the scale. Therefore, the combined result of the desire of hon. Members opposite first to defeat that proposal and second to push this one is, of course, deliberately to confine the benefit to those at the top of the scale.

Mr. Stevens: The proposal of the right hon. Gentleman did not include a suggestion to increase the ceiling. The ceiling, if I remember rightly, remained the same. Therefore, the benefit proportionately was less higher up the income scale, was it not?

Mr. Jay: Yes, but it would have given some benefit to everybody at most levels of earned income. In so far as the hon. Gentleman first votes against that and then makes his own proposal, he is seeking to confine the benefit to this particular level.

Mr. Stevens: Surely, if the ceiling remains the same, even though we increase the proportion, the total allowance for a person over that ceiling would be exactly the same?

Mr. Jay: The same reduction in tax, I think the hon. Gentleman will agree, would be made, although, of course, it would be proportionately less than to those lower down.
However, the main point I want to make tonight is that we are opposed to this present proposal to confine the next benefits of tax reduction to those in the higher brackets of income. I think that, even if we lay aside the pure argument from equity that it is undesirable to give benefit to those whose incomes are larger than others farther down the scale, on the ground of incentive, on which the hon. Gentleman largely rested his case, there are at least three strong arguments against this proposal.
First of all, although it is very true that the managerial and professional workers whom the hon. Gentleman had in mind are exceedingly valuable and important members of the community, it is ridiculous to suppose that the manual workers' efforts and productivity are not also exceedingly important in our total production. I agree with the hon. Gentleman, from experience of such large organisations as those of which I have been a member, that the efforts of the key personnel, who are very often at the top of one department or another, are exceedingly important in the working of the whole. But I would not draw the inference from that that the productivity of those all down the line is of lesser importance.
Suppose we were to apply the hon. Gentleman's proposal, for instance, to the

coal industry. I think it is probably true that the efforts of the comparatively few managerial, technical, planning workers and so on in the coal industry at the present time are of crucial importance to the industry. But surely we should not say that the efforts of the actual miners at the coal face are not also of enormous effect in deciding the total production of coal. Indeed, the attitude of hon. Members opposite here again seems to me slightly anomalous. They are inclined sometimes to join, when discussing the coal industry, in the rather prejudiced and ignorant outcry about the black coated or white collared administrative workers who, it is implied, are not making any valuable contribution as compared with the manual workers. But when we come to this question of taxation, they want to confine tax reductions and the argument from incentive to the managerial and administrative type of worker.
In our view there is a case for giving this concession and accepting, with a due sense of proportion, this argument in the case of both sections. I think it was the hon. Gentleman the Member for Lang-stone who spoke of the leap in productivity that might occur if his proposal were accepted. Surely he will agree that we should not in the coal industry get a leap in productivity merely by confining tax reductions to incomes of £2,000 a year and over.

Viscount Hinchingbrooke: I just wanted to make certain that the right hon. Gentleman is convinced on his own behalf and that of his party that if greater tax reductions were given to the ordinary coal miner, the man working at the face, and improved conditions and a greater increase of wealth in the home, we should have higher productivity of coal. Is he convinced of that?

Mr. Jay: I think there is some force in the argument so constantly put forward by hon. Gentlemen opposite, and, I think, by the noble Lord among others, that reductions in direct taxation would have some effect in an increase of production all along the line. In so far as this is true, I am arguing that it certainly extends to the manual workers as well as to those who are receiving higher incomes. I was going on to my second


argument in criticism of the hon. Gentleman's thesis. Surely, as my hon. Friend the Member for Rotherham (Mr. Jack Jones) said, the motives of pride in work, of pride in responsibility, of prestige, influence and so on are not merely exceedingly important in many sections of the community, but, on the whole, have tended to be more important as we go higher up the scale.
8.0 p.m.
In the very nature of the case, the attraction of responsibility, of power and so on must become stronger among those earning the higher incomes. I think that hon. Gentlemen are committing rather a slander on managerial and professional workers when they suggest that they are hanging back, not working, and refusing to accept promotion because they cannot earn quite as much net income as they might expect to do. After all, do we ever meet in the Civil Service, in industry or in the Services those people who are unwilling to accept promotion? I should have thought that was a completely unreal picture of the country in which we live, and that in actual fact we find remarkable anxiety and willingness to accept promotion in the Civil Service, in industry or whatever it may be.
I think, too, that the picture of managing directors leaving this country in order to earn higher incomes is equally far from reality, and is equally a reflection on the patriotism and sense of responsibility of the people concerned. The hon. Gentleman, introduced the question of emigrants, asked how often did one come across emigrants from this country going elsewhere in order to earn higher incomes. I think that argument really tells against his thesis because if we ask to which countries the average emigrant from the United Kingdom normally goes, we find that, on the whole, it is to those countries with comparatively higher rates of direct taxation. They go to Australia, New Zealand, Canada and, to some extent, to the United States. We do not find them going to countries like Spain, Italy and Egypt where there are very low rates of income tax. The fact of the matter is, of course, that it is not comparative taxation one way or the other—it is a quite different emphasis and argument which determines their decision in

those cases. Therefore, again, I think, this argument cannot really be made out.
Thirdly and finally, I would add this in comment on the hon. Gentleman's argument. After all, if we are going to try by reduction in taxation on earned income to produce a stimulating and encouraging effect upon productivity throughout the country, surely we want to get the maximum effect for each £1 million of revenue which we forgo. I expect that the Financial Secretary will tell us that he cannot accept this Clause because he cannot suffer in revenue. We all agree that that is one of the considerations to which we have to look. If that is so, it is desirable to make the reduction as comprehensive as possible, because the more people affected, the greater is the likelihood that the influence on the production of the country as a whole will be greater.
For all these reasons, it seems to me that we cannot possibly make out a case for confining a concession involving so large an amount of money as £15 million—if that is the correct estimate—to such a very narrow group in the community. We on this side of the House are in favour, as and when it can be done, of reductions in taxation on earned incomes, and we recognise that there may be some argument on the ground of incentive for making such reductions when it can be done, but we emphatically do not think that this is the way to do it or that it should be confined to a narrow group at the top of the income scale.

Mr. Boyd-Carpenter: The effect of the Clause that my hon. Friend the Member for Langstone (Mr. Stevens) has moved, in his very agreeable and interesting speech, would be to raise to £1,000 the maximum amount of income which could be relieved by earned income relief or to put it another way, to allow the present 2/9ths scale to run from the present ceiling of £2,025 up to £4,500.
My hon. Friend did express with great clarity and force some of the reasons which impelled him to put down this Clause. Let me say at once that I fully appreciate the very serious effect which high taxation over a prolonged period has had on the professional and managerial classes. It is, I think, beyond doubt, both from a relative and absolute point of view, that they have suffered very


seriously, and with a great deal of what he said as to the desirability of giving them as much relief as possible I would not for one moment quarrel. It is, of course, part and parcel of these ill-effects of too high taxation, too long maintained, which we discussed at an earlier stage of this Bill and on which I said at greater length something similar to that which I have said more briefly this evening.
There is a real problem, too, I think, in what my hon. Friend said as to the position which sometimes arises when it is desired to transfer on promotion some manager or other to a higher position. I think that my hon. Friend rather spoiled his case when having emphasised the type of man he had in mind—the first-rate type of man—he indicated that when he came to the London area he would want to settle in Wimbledon or Hampstead, when it is well known that when he comes to the London area he would want to live in the Royal Borough of Kingston-on-Thames or in the borough of Surbiton.
Apart from that trifling blemish in his argument, I think that most of us in our own experience have come across cases of that sort. I thought that it was a little unfair of one or two hon. Gentlemen opposite to suggest that by drawing attention to that difficulty my hon. Friend was suggesting a kind of "go slow" among the professional or managerial class. No one, I think, who has had any experience of the work which that section of the community has done in the difficult circumstances of war and in the post-war years would believe that for one moment. In assessing the burden of taxation that can be properly borne we must bear in mind the effect of that taxation, particularly when prolonged, on certain sections of the community. I do not propose, for reasons which I will give, to enter into discussion with my hon. Friend as to whether, assuming that this sum of money were available, this would be the best way for my right hon. Friend to make use of it.
I think, as my hon. Friend himself clearly understood, the difficulty which stands immediately in the way of this proposal is its cost. The actual figure of cost is not the £15 million which my hon. Friend suggested, or the £20 million suggested from the benches opposite, but, so far as I am able to ascertain, is of the order of £17 million a year. That is, I am

afraid, when looked at on top of the reductions in taxation which my right hon. Friend has effected this year, more than can be afforded, because we have to bear in mind, not only that substantial concessions in taxation have been made this year but equally the fact that this country has to maintain and sustain a very large defence programme and a very large and complex system of social services. Therefore, I am sorry to have to say to my hon. Friend that the cost of his proposal does of itself make it impossible for my right hon. Friend to accept it.
I do not want to over-emphasise, but nonetheless it is fair to comment that the section of society to which I have been referring has certainly obtained some relief from my right hon. Friend's proposals, notably, as the hon. Member for Stechford (Mr. Roy Jenkins) pointed out, by way of the reduction in the standard rate. Thus, we are dealing with the question of relief to a section which, although heavily taxed, has not been denied some relief in the proposals in this Finance Bill.
I do not want to be led into an intellectual argument as to whether it is better to give relief by way of earned income allowance or alterations of the standard rate. In moving the proposed Clause, my hon. Friend went out of his way to say that he regarded the method embodied in the Clause as a second best and said that it was put forward on grounds of relatively lower cost. Some hon. Members opposite appear to take the other view. It is a problem which, when funds are available, ought to be looked at in the circumstances of the time. I do not think it would be particularly wise or sensible of me to give any wide general statement of opinion at the moment.
However, it may be of interest to hon. Members to note that both the earned income relief fraction of two-ninths and the maximum amount of income which can be relieved from tax in this way are at present higher than they have ever been. That is the direct result of the changes in respect of these reliefs which were effected in my right hon. Friend's proposals last year. Consequently, I say to my hon. Friend and to other hon. Members who have concerned themselves with the matter that we are at least starting on a basis where the relief,


whether it be at the right level or the right limit or not, is actually bigger than it has ever been before. It is true that it is one way, but one way only, of bringing the relief which it is desired to bring.
I hope I may be allowed to say that we have had a very interesting and thoughtful debate. It has certainly indicated that, as and when funds become available for further tax relief, if funds do so become available, there will be no difficulty in finding suggestions as to the way in which they can be disposed of. It is equally clear that there is a very wide variety of views—I am sure, most sincerely held—in all quarters of the House as to the best methods of using such a surplus. But, as I have had to point out—as I can do with some confidence in view of the very large tax reliefs which have been conceded—my right hon. Friend has gone a long way in the direction of reliefs this year and it is just not compatible with his responsibilities to accept a further load.
One of my hon. Friends asked me to say something about this in connection with next year's Budget. The House will recall that even shortly before a Budget it becomes necessary for my hon. Friend the Economic Secretary and myself to stand at the Despatch Box at Question time and say that we regret that we cannot anticipate our right hon. Friend's Budget statement. I really do not think that, while we are discussing one Finance Bill, I can reasonably be pressed to anticipate the next.

Mr. Harold Wilson: At the same time, surely the hon. Gentleman would not want in any way to diminish the satisfaction, such as it is, in cinema circles by the degree to which his right hon. Friend anticipated his Budget speech of next year in relation to Entertainments Duty in the case of cinemas?

Mr. Boyd-Carpenter: I should certainly not wish to diminish the pleasure which my right hon. Friend has given in that direction, but the right hon. Gentleman is perfectly well aware of the terms of these observations and I do not think they are material to this very different and very precise suggestion as to a method of adjusting the Income Tax allowances.
This interesting debate is on record and the views expressed will be available to my right hon. Friend or to others as and when circumstances arise in which the agreeable subject of relief from tax can again be considered.

Mr. Stevens: Having been very much impressed by the cogent arguments of my hon. Friend, rather than by the somewhat vulnerable arguments of right hon. and hon. Gentlemen opposite, and having regard to the fact that he accepts the idea underlying the Clause, I look to the future and beg to ask leave to withdraw the Motion.

Motion and Clause, by leave, withdrawn.

New Clause.—(EXPENSES OF EMPLOYEES IN TRAVELLING TO AND FROM THEIR WORK.)

In paragraph (a) of section one hundred and fifty-nine of the Income Tax Act, 1952, there shall be inserted after the words "nineteen hundred and thirty-nine," the words "or consequent upon a change of employment or a change in the place of the employment on or after the sixth day of April, nineteen hundred and fifty-two."—[Mr. Houghton.]

Brought up, and read the First time.

8.15 p.m.

Mr. Houghton: I beg to move, "That the Clause be read a Second time."
Hon. Members may be a little surprised at the provisions in Section 159 of the Income Tax Act, 1952. The Section puts into the consolidated Income Tax Act a wartime concession which was given on account of removal of place of employment or of residence involving additional travelling expenses through circumstances connected with the war. It will assist the House to understand what I propose if I read from the Section. It says:
If it is shown in the case of a person assessed to income tax under Schedule E in respect of any office or employment—

(a) that his place of work or his residence has changed through circumstances connected with the war which began in the year nineteen hundred and thirty-nine; and
(b) that in consequence he is obliged to incur, and defray out of the salary … arising from the office or employment, additional expense in travelling between his residence and his work, the additional expense so incurred and defrayed shall be allowed as a deduction …"

for Income Tax purposes
… so, however, that not more than ten pounds shall be so allowed in the case of any person in any year.


That was a reasonable concession introduced in the exceptional conditions of disturbance during the war, but it has not been brought to an end, and there must be a very large number of allowances still being made in respect of changed circumstances which arose during the war or immediately after the war. What surprises me is that new claims are still being admitted under this Section of the Income Tax Act.
My proposal seeks, in fairness, either to bring the existing concession to an end or to extend it to an additional class of taxpayer. The words which I propose to insert after paragraph (a) of the Section extend the relief to those who incur additional travelling expenses between their home and their work consequent upon a change of employment or a change in the place of the employment on or after 6th April, 1952.
If additional claims are still being admitted on account of additional travelling expenses connected with the war, then a change of employment or a change of the place of employment in circumstances at this date equally merits the concession which is being given in the case of changes arising from the circumstances of the war.
Moreover, I think it would be a good thing to mitigate some of the hardship of change of employment or change of the place of employment by an allowance of this kind because we all realise that some degree of mobility is required. In present circumstances people should not hesitate to change their jobs or change the place of their employment if it is in the national interest that they should do so.
Certain changes in the pattern and location of industry are inevitable in present conditions if our industry is to remain flexible and adaptable, and we can adjust ourselves to the changing needs and circumstances of world conditions. We must not just stick in a rut and think that because we have a job near our homes which enables us to get there conveniently and cheaply that we should not move to another one which might be of greater importance in the national interest because it might involve us in additional travelling expenses.
On the administration of the existing Section, I believe that there is a substantial inequality as between one section

of taxpayers and another, because as far as I know nobody has ever sought to say what is meant by the words:
through the circumstances connected with the war.
That is, obviously, wide open. Almost any change of residence and any change of location might conceivably be held to have arisen out of circumstances connected with the war. One might say that the building of a new housing estate on the fringe of one of our large towns to which many workers have had to go to live, increasing the expense of travelling to and from their work, was caused through circumstances connected with the war. Had it not been for the war this housing shortage would not have arisen; had it not been for the war there would have been the steady development of the housing programme; and had it not been for the war something else might have made a difference to what has actually happened.
I imagine taxpayers could put forward most ingenious reasons for this allowance on the grounds that something has happened through circumstances connected with the war. For instance, had it not been for the war there would not have been an enlargement of a particular establishment; had it not been for the enlargement of a particular establishment it would not have been necessary to hive part of it off to be housed in new premises some distance away; had it not been necessary to hive part of it off to be housed in new premises some distance away then those additional travelling expenses would not have been incurred; and, therefore a claim could be made that there had been an increase in costs arising from circumstances connected with the war.
I think the House would like to know just how wide open this Section is, and if it is that wide open, as I believe it to be, my proposed new Clause would not make it much wider, because many people change their employment or change their place of employment and under the existing Section the reason advanced is that that arose through circumstances connected with the war. But I think there is a positive rather than a negative reason for the proposed new Clause, and that is the one I have given.
I have no desire to withdraw from those who are getting the allowance, or can get the allowance, the benefit that


they receive, but I think that we want to draw a line much more clearly between those who can claim under the existing circumstances and those who cannot so that we shall bring within the Section all the people who are just as deserving of this relief as those who are entitled to claim it now. In some cases may be they are more in need of this relief because they are probably making a move, not through circumstances connected with the war or at any rate not directly connected with it, but through circumstances connected with the change of the pattern of industry and the need to get additional manpower in essential jobs in order that production may be maintained and increased.
Although I fully understand the problems of administration, which I am always conscious of because I am so close to them, I submit they raise no new problems of administration within the existing Section, and it would in any case be worth while going to the trouble of considering and deciding all the claims under the proposed addition to the Section within the limits prescribed by it. The House will realise that the maximum relief is a tax of £10, so that there is nothing either in the Section or in the new Clause that I propose which will enable the person concerned to travel to and from Brighton or from some other expensive residential area with some relief to his Income Tax burden. This would be related to those who change their employment or change the place of their employment, and not to those who change for their own convenience or for their own purposes. It would not, in fact, bring a change of residence into the matter at all.
Finally, the House will appreciate that not only is there a limit on the relief that can be given, but the relief itself is restricted to the additional expenditure incurred. Therefore, it is only the extra cost arising from the change of place of employment or change of employment which would qualify for the relief in the same way that only the additional cost of travel qualifies for the relief under the existing Section.

Mr. Maudling: My impression was that the existing Section says that a person must show that his place of work or residence has changed through circumstances

connected with the war. The hon. Gentleman proposes to add after the words
nineteen hundred and thirty-nine
the words
or consequent upon a change of employment. …
I take it that that means that a man's place of work or residence is changed consequent upon the change of employment. Is that what the hon. Gentleman intended?

Mr. Houghton: It was not my intention, but I see that as drafted it would bring in a change of residence. I did not intend to bring in a change of residence, and I did not realise that the words before paragraph (a) would govern the extension to the new Clause, but as drafted it looks as if the whole preceding words would apply. In any case, I do not think that that would be a disqualifying feature of the proposed new Clause, because the change of residence through circumstances connected with the war is, of course, an entirely different matter from a change of residence connected with an extension of a factory, and so on. It would have to be related to a change of employment or a change in the place of employment.
Furthermore, one can assume—and this is probably the reason why I did not think that the question of change of residence did come or need come into the extended concession—that it was generally conceded that if there was a change of residence on account of a change of employment or a change of the place of employment it would be a change of residence nearer to the place of employment and not further away, whereas circumstances connected with the war drove people further away from their work than previously was the case. Having thought the matter out as I stand here there is nothing very serious about that point, but I freely admit that I had not taken it into account in drafting the Clause. I hope that the Economic Secretary will look at the proposed new Clause in a sympathetic manner, because I think it is something which is worthy of consideration and I wholeheartedly commend it to him.

8.30 p.m.

Mrs. E. M. Braddock: I beg to second the Motion.
I am rather sorry about the last few comments of my hon. Friend the Member


for Sowerby (Mr. Houghton), because there are many instances throughout the country where slum clearance is going on and people who live on top of their jobs are compelled, because of the alteration in housing accommodation or the use of housing accommodation for other purposes, to go very far distances.
In my own particular area dockers recently came to see me on this question. Their accommodation had been scheduled for demolition, and the only alternative accommodation they could get was a distance of approximately seven or eight miles from the centre of Liverpool. They had to travel daily to the docks for their employment, and they have been grumbling about the effects.
No provision has been made for additional travelling expenses although they have had increased costs because of the alteration in their original housing owing to a new zoning of areas in central Liverpool for slum clearance and redevelopment. I was hoping that that would be included or taken into account.
There is also the fact that many people change their jobs and remain in the same areas, particularly in a large industrial area like Liverpool where, arising out of the war, such departments as those belonging to the Ministry of Supply have had to go great distances from the residential areas or the central housing areas in Liverpool. That has meant high travelling expenses for the workers to reach their jobs, and they have had to do that because there was not employment in the area where they live and where their firm used to work but which had to be transferred to another centre.
People come to those of us who hold "surgeries" in our constituencies, and because of the peculiar situation in Liverpool I have had any number of people asking me how they can claim the additional cost of travelling because their employment has moved. One of the big firms in Liverpool moved from the Liverpool docks to Ellesmere Port and its employees had to go with it. People have asked me repeatedly how they could obtain relief. When I pointed out Section 25 to them, they said that the move had nothing whatever to do with the war but was because the firm had closed down in the area where they were living and had started somewhere

else, involving them in an additional cost in many instances of between 8s. 6d. and 10s. a week on travelling.
Recently, when I was in Wolverton, two or three people told me that they had to pay 8s. 6d. a week to travel to Wolverton from some of the outlying areas. People who had been employed in small businesses now had to find employment in the industrial area of Wolverton and, consequently, to spend what were to them large amounts on travelling.
I agree with my hon. Friend that, administratively, there might be difficulty in operating this proposal, because certain firms provide travelling facilities from a central area to the place of employment. But it should not be outside the powers of the Inland Revenue to find some way of assessing the additional cost in travelling expenses for people who are compelled to move from work which is near their home to a job which is a considerable distance away. The closure of a firm locally can frequently involve a journey of seven, eight or nine miles. In the case of the move from Liverpool to Ellesmere Port, the journey is more like 12, 13 or 14 miles.
There are good reasons for considering the new Clause. I hope that it may be accepted in principle, even if not in the precise wording put forward by my hon. Friend. In any event, I hope that this matter will be looked at very carefully. People tend to take the attitude that they will not travel away from their own areas when they have been accustomed to working almost on top of their homes, unless in some way they get relief in the shape of additional travelling expenses. Equally, instead of travelling elsewhere to their same employment, people look for other work which is, possibly, less important.
I hope that the proposal will be examined to see whether it may be possible to administer it, perhaps, through P.A.Y.E. Employers will know the distances that employees have to travel from their homes and will know of the altered circumstances that arise because of the rearrangement of housing areas in large industrial centres. If some way can be found to give effect to this proposal, the relief thus afforded will be very much appreciated by many industrial workers.

Mr. Ellis Smith: I shall not detain the House long but I want to make a few observations in support of this Clause arising out of my own experience. During the passage of the Finance Bill last year the Financial Secretary gave an undertaking that this would be considered during the next 12 months and therefore, while I have not looked up the exact terms of that undertaking, I hope it has been carried out. If not, it should be carried out during the next 12 months.
This is becoming an increasing problem in industrial areas. It is well known that housing estates are being built several miles outside the big cities, especially in the industrial North. At Stoke-on-Trent, where the whole city is undermined, the local authorities are having to consider where they can build houses so that they will not be subject to mining subsidence. So that housing estates are being built more and more outside the city, with the result that serious questions of travelling are involved. The same applies to Manchester and Salford and Liverpool. I can endorse every word my right hon. Friend said about Liverpool, because I have a brother living there. While he is not affected to any great extent, a large number of people are affected who live out in the Prescot district on towards Ormskirk on that side of the city of Liverpool where some of the largest housing estates in the country are being built.
When there are two or three members of the family who have to travel the seriousness of this matter will be readily seen. It is made worse by the fact that they know that in certain circumstances expenses are allowed for other people who are well placed in life. Surely, therefore, it is a legitimate grievance which should be dealt with? Many thousands living in Wythenshawe and surrounding districts work in Manchester, which is many miles distant. I mention these centres because I am familiar with them. Other hon. Members will no doubt be able to provide evidence to substantiate what has been said. I would not have arisen had I not heard my hon. Friend stating the case on behalf of Liverpool and knowing that when the matter was dealt with on the last occasion an Amendment was moved by an hon. Member opposite. Then the Financial Secretary was sympathetic and said

consideration would be given to the matter.

Mr. F. P. Crowder: My only quarrel with the Clause is that it does not go far enough. The attitude of the Revenue authorities at the moment seems to be that if a person does not live near his place of business that is his own fault and no allowance will be made for travelling expenses.
In these days of housing shortage, particularly after the war, many people are not in a position of being able to live near their place of business. I begin by giving a rather remote example, and I am sure I shall be corrected by experts on Income Tax if I am wrong. Take the position of a recorder who is suddenly promoted to that high office in some county far distant from London where, possibly, he has been practising as a member of the Bar. He has to go there quite a number of times in the year to carry out his duties for a very small remuneration. The fact that he does not happen to live in the town to which he is appointed as recorder and to which he goes, 10, 15 or 20 times a year, means absolutely nothing to the Inland Revenue authorities. Their retort is, "You can have no expenses for travelling to the town to which you have been appointed."
Probably that is on a high level, and I declare my interest in the matter as a practising member of the Bar, but I can give another aspect of this problem from my constituency. A large number of people have moved into a new estate, many coming from Acton and nearly every one of them against their will. They had no wish to move and their houses are, unfortunately, extremely expensive. But, having returned from the war, as ex-Service men they felt they had a right to marry and settle down and this was the only place where they could find houses. Now they find that with the increase in fares they have to pay far more than they budgeted for each year. This argument falls into line with the proposed new Clause. It was no fault of theirs that they had to move, but the Revenue still insist in taking the dogmatic attitude of, housing shortage or no housing shortage, results of war or not, no allowance can be claimed, one must pay the full fare as a result of not living near one's place of work.
I do not for a moment suggest that at this moment the Treasury can afford to give a complete concession in this respect, but I should have thought that in these circumstances the Government could seriously consider giving, say, a 25 per cent. allowance in respect of extra fares in particular in relation to the new Clause so ably put forward by hon. Members opposite. That is not very much to ask and would not make very much difference in the way of revenue.
Today many people are afraid to take a new job. We of all people, the party of enterprise, should encourage people to move about the country and to take new jobs. I appeal to the Government to give some concession in this respect, however small it may be. I can assure them it is something which is deeply resented by numbers of people who, very much against their will and entirely owing to the difficult housing conditions existing today, are finding it more than difficult to make ends meet, particularly after the recent increase in fares.

8.45 p.m.

Mr. Maudling: This is a matter of considerable importance to a great number of people. I was interested in what the hon. Member for Liverpool, Exchange (Mrs. Braddock) had to say about experiences in her constituency and also what the hon. Member for Stoke-on-Trent, South (Mr. Ellis Smith) said. Representing, as he does, a surburban constituency in North London my hon. Friend the Member for Ruislip-Northwood (Mr. F. P. Crowder) will know that the question of fares and travelling expenses falls heavily upon people who go up to the City each day.
This matter, which is obviously worrying a great number of people, was raised last year by my hon. Friend the Member for Wimbledon (Mr. Black). I explained then why the Government could not accept the large departure in taxation principles involved in a proposal put forward then which was rather similar, though not on all fours with the present proposal. I said then that my right hon. Friend would no doubt carefully consider what had been said. Hon. Members opposite have leapt at me about an assurance that consideration would be given in the next 12 months.
This is one of the things being specifically considered by the Royal Commission, to whom representations have

been made. They will provide us, in due course, with their advice on what is a complex problem. One of the complexities was illustrated in a point which arose as a result of my intervention in the speech of the hon. Member. I wished to be clear on a point about which I was not clear. But it is clear now that he did not intend an allowance of this kind to apply in cases where there was a change of residence but not a change of employment.
The hon. Lady, however, put forward a strong case for people who change their residence by moving from what is perhaps an old house to a new housing estate. The position is that there has always been a very clear distinction drawn between expenses which are allowable and those which are not. If people spend money in fitting themselves for their occupation or to put themselves in a position to carry out their occupation that is not allowable.
What one spends in carrying out the job is allowable. One could give many instances where it is a little difficult to draw the line. Expenses incurred in travelling to one's place of work are not allowable but travelling expenses on business are allowable. I think the case of Ricketts v. Colquhoun is the best known authority. We should be careful in departing from this distinction which had been established and has stood the test of time.
Once expenditure is admitted which is not incurred actually in the performance of the job we arrive at the position where we may have to consider a very wide range of things. One has to clothe oneself adequately, and a claim might be put forward on that basis. I agree at once that the question of special protective clothing raises quite a different point. There is also the fact that though a great many people may be compelled to live further from their work than they would wish, it is equally the case that a number of people live away from their work from choice. They pay the extra cost of travelling because they prefer to live outside a town, for example. They choose deliberately to enjoy more pleasant surroundings at the cost of paying higher fares.
In those circumstances, it will be agreed that there is no case for giving a


special allowance for what is a matter of personal choice and not a matter of essential and necessary expenditure in the performance of the duty from which the income arises. That is the main question of principle.
To turn to the terms of the new Clause, I would say that I never listen to the hon. Member for Sowerby (Mr. Houghton) without learning something new about Income Tax law. I was interested in his remarks about the wartime allowance. I agree that the words in which it was framed are not very satisfactory. In practice, this provision has led to certain difficulties when deciding what exactly is allowable and what is not.
My impression was that, broadly speaking, claims under the Section had ceased shortly after the end of the war, but the hon. Gentleman is right. There are still a number of claims being put forward and accepted. I am told that they are few in number and that the total cost is very small. I do not think that the situation can be regarded as really satisfactory. On the other hand, it seems doubtful whether it would be justifiable to go ahead now and bring it to a stop deliberately rather than to let it peter out.

Mr. Houghton: The knowledge of this concession has now become more widely known.

Mr. Maudling: That is interesting. We will take careful account of that information. But when the hon. Gentleman goes beyond that and proposes to extend the concession in the way suggested in the new Clause, a number of considerable difficulties arise. For example, he argued with cogency the desirability of encouraging the mobility of labour. But this new Clause would give its benefit to anyone who changed employment for any reason and in whatever direction. While mobility of labour is in many cases desirable, there is also an argument that excessive turnover in an indiscriminate manner could do harm.
Then, applying, as it does, to any change of work, a person who took a temporary job near home for a short time could thereafter always claim the allowance. That is a consequence which I do not think the hon. Gentleman wants.

Then there would be the position of two people both living in Barnet and working in the same office in the City. One may have lived in Barnet and worked in the same office all his working life and he would get no allowance. His neighbour who had just joined him in the firm, having previously worked in a firm between Barnet and London, would get the allowance. Yet both work side by side doing the same job and one gets the allowance and one does not.
The Clause as drafted would not be a satisfactory answer to what is certainly a problem about which there is growing feeling. Therefore, my right hon. Friend cannot accept it. But I repeat again—and I hope that hon. Gentlemen have not heard this too often—that my right hon. Friend has thought it better to see what the Royal Commission have to say on the point on the basis of representations made to them. He will study with care what they have to say.

Mr. Gaitskell: The Economic Secretary has given us his usual courteous, almost disarming, reply and paraded a number of arguments against this Clause and the rather wider proposal which was referred to during the debate of allowing travelling expenses to work as a legitimate expense for Income Tax purposes. I must confess that I find myself somewhat dissatisfied with the situation as it is today.
My hon. Friend the Member for Sowerby (Mr. Houghton) dealt with great lucidity with the peculiar circumstances which developed during the war and the fact that Section 159 of the 1952 Act continues a war-time arrangement. I have no doubt that, whether or not the news about this was getting around before the debate, it will get around afterwards. I do not know whether my hon. Friend's previous associates will thank him for having made it rather easier perhaps to claim allowances against changes of work and residence.

Captain J. A. L. Duncan: May I remind the right hon. Gentleman that the 1952 Act was a consolidation Measure? Therefore, we had to continue that Section. We could not take it out.

Mr. Gaitskell: I fully appreciate that. I am not arguing that the Section should necessarily be brought to an end. I was


interested to hear what the Economic Secretary said about that. He said that there are some claims continuing under it. Presumably that is the reason why it has not been repealed. Let us consider for a moment the reason why it was introduced. It was undoubtedly because, during the war, people were obliged to move a good deal in the interests of the country and, in consequnce, it was most unfair that they should have to endure additional travelling expenses without being able to claim them as an allowance against tax.
Quite apart from all the difficulties of interpreting the Clause in present circumstances, I think we have to face the question why, if it was desirable to make this change in the law during the war, in order to encourage people to move as the Government wished them to move, it should not be continued on a broader basis in peacetime. I should have thought that the Economic Secretary would have been impressed with the very powerful arguments put by all my hon. Friends in favour of encouraging the mobility of labour. If there is one thing on which experts all seem to agree, it is that, in a full employment economy, it is most desirable that the mobility of labour should be encouraged; otherwise, we get far too rigid a pattern, we do not get manned up the industries that ought to be manned up, and people remain far too long in occupations of less national importance.
We have not been given any reasons why this problem should not be dealt with; nor can I accept the criticism of this new Clause put forward by the Economic Secretary on the grounds that the wording would include a change of residence consequent upon a change of employment. I think my hon. Friend can be perfectly happy about the wording as it now stands. It would be quite reasonable, in our view, that when a change of residence is necessary because of a change of employment, the extra expense should be charged for Income Tax purposes. I appreciate the interest of my hon. Friend the Member for Liverpool, Exchange (Mrs. Braddock), and of my hon. Friend the Member for Stoke-on-Trent, South (Mr. Ellis Smith), who think that the Clause should be widened still further, but I know that

they will agree that, however desirable it is, we are not actually concerned with it now. They will also agree that, if we can get half a loaf, it is better than no bread at all.
Therefore, I do not think we can accept the argument that this new Clause is unsatisfactory because of the particular wording involved. As a matter of fact, it would not be in the least difficult to alter it to correspond with what was originally in the mind of my hon. Friend. The Economic Secretary admitted that last year the Chancellor had, in fact, undertaken to consider this whole matter, and he even drew attention to the fact that my hon. Friend the Member for Stoke-on-Trent, South seized upon this fact and thanked him for it. I do not think it is quite good enough to come back to the House and say that the Chancellor has been considering the matter all this year and that he is now asking a Royal Commission to look into it. If it was really to be left to a Royal Commission, it would have been sufficient to have said that last year, but we certainly got the impression that the Government were giving more careful attention to this matter than they seem to have done.
Finally, there is the point referred to by my hon. Friend the Member for Stoke-on-Trent, South, which cannot be ignored. Admittedly, it goes rather wide of the particular Clause, but the fact is that, although the law does not allow the expenses of travelling to and from work to count against tax, it is well-known to all of us that those who use their cars to go to work, in fact, are in a position to, and I am afraid often do, get away with the expense of getting to and from their work. It is no use the Economic Secretary making a face; he knows perfectly well that it is so, and it is almost impossible to draw a sharp line between the expense of the car while at work and the expense involved while using it in getting to and from work. Exactly the same problem used to arise in connection with petrol rationing. It was a headache to us then, and this ought to be a headache to the Government now.
I do not know what my hon. Friend who moved the Second Reading feels about this matter. It is his Clause, and he has moved it very ably. I do not feel


that the Government's reply can be accepted as in the least satisfactory.

Mr. F. P. Crowder: Does the right hon. Gentleman realise that what he has said about the use of motor cars is not quite true. I have to deal with the Revenue in this matter, as I go to and from my home to work. I always discuss with the Revenue the mileage over the area, and they take off some of it, having worked out the distance from my home to my place of business, and they arrive at the assessable part of that allowance. It is not fair to say that people are getting away with it.

I do not think that the right hon. Gentleman wants to be unjust, but what he said is not quite right.

Mr. Gaitskell: I do not desire to be unjust, and I was not implying that the hon. Gentleman or any hon. Gentleman was getting away with anything; but I still think that a large number of people do get away with it.

Question put, "That the Clause be read a Second time."

The House divided: Ayes, 221: Noes, 246.

Division No. 215]
AYES
[9.1 p.m.


Acland, Sir Richard
Fernyhough, E.
McLeavy, F.


Adams, Richard
Fletcher, Eric (Islington, E.)
McNeil, Rt. Hon. H.


Allen, Scholefield (Crewe)
Foot, M. M.
MacPherson, Malcolm (Stirling)


Anderson, Alexander (Motherwell)
Forman, J. C.
Mainwaring, W. H.


Anderson, Frank (Whitehaven)
Fraser, Thomas (Hamilton)
Mallalieu, J. P. W. (Huddersfield, E)


Attlee, Rt. Hon. C. R.
Freeman, John (Watford)
Mann, Mrs. Jean


Awbery, S. S.
Gaitskell, Rt. Hon. H. T. N
Manuel, A. C.


Bacon, Miss Alice
Gibson, C. W.
Marquand, Rt. Hon. H. A


Balfour, A.
Glanville, James
Mason, Roy


Barnes, Rt. Hon. A. J
Gordon Walker, Rt. Hon. P. C.
Mayhew, C. P


Bartley, P.
Greenwood, Anthony (Rossendale)
Messer, Sir F.


Bence, C. R.
Grenfell, Rt. Hon. D. R.
Mikardo, Ian


Benn, Hon. Wedgwood
Grey, C. F.
Mitchison, G. R


Benson, G.
Hale, Leslie
Monslow, W


Beswick, F.
Hall, Rt. Hon. Glenvil (Colne Valley)
Moody, A. S.


Bing, G. H. C.
Hall, John T. (Gateshead, W.)
Morgan, Dr. H. B. W


Blackburn, F.
Hamilton, W. W.
Morley, R.


Blenkinsop, A.
Hannan, W.
Morris, Percy (Swansea, W.)


Blyton, W. R.
Hargreaves, A.
Morrison, Rt. Hon. H. (Lewisham, S)


Boardman, H.
Harrison, J. (Nottingham, E.)
Mort, D. L.


Bottomley, Rt. Hon. A. G
Hastings, S.
Moyle, A.


Bowden, H. W.
Hayman, F. H.
Mulley, F. W


Braddock, Mrs. Elizabeth
Henderson, Rt. Hon. A. (Rowley Regis)
Nally, W.


Brockway, A. F.
Herbison, Miss M.
Neal, Harold (Bolsover)


Brook, Dryden (Halifax)
Hobson, C. R.
Noel-Baker, Rt. Hon. P. J


Broughton, Dr. A. D. D.
Holman, P.
Oldfield, W. H.


Brown, Rt. Hon. George (Belper)
Holmes, Horace (Hemsworth)
Oliver, G. H.


Burke, W. A.
Houghton, Douglas
Orbach, M


Burton, Miss F. E.
Hoy, J. H.
Oswald, T.


Butler, Herbert (Hackney, S.)
Hubbard, T. F.
Padley, W. E


Callaghan, L. J.
Hudson, James (Ealing, N.)
Paget, R. T.


Carmichael, J.
Hughes, Emrys (S. Ayrshire)
Palmer, A. M. F


Castle, Mrs. B. A
Hughes, Hector (Aberdeen, N.)
Pargiter, G. A


Clunie, J.
Hynd, H. (Accrington)
Paton, J.


Coldrick, W.
Irving, W. J. (Wood Green)
Peart, T. F


Collick, P. H.
Isaacs, Rt. Hon. G. A
Plummer, Sir Leslie


Corbet, Mrs. Freda
Janner, B.
Popplewell, E.


Cove, W. G.
Jay, Rt. Hon. D. P. T.
Price, Joseph T. (Westhoughton)


Craddock, George (Bradford.
Jeger, George (Goole)
Proctor, W. T.


Crosland, C. A. R.
Jeger, Dr. Santo (St. Pancras, S.)
Pryde, D. J


Crossman, R. H. S.
Jenkins, R. H. (Stechford)
Pursey, Cmdr. H


Cullen, Mrs. A.
Johnson, James (Rugby)
Rankin, John


Darling, George (Hillsborough)
Jones, David (Hartlepool)
Reeves, J.


Davies, Ernest (Enfield, E.)
Jones, Frederick Elwyn (West Ham, S.)
Reid, Thomas (Swindon)


Davies, Harold (Leek)
Jones, Jack (Rotherham)
Reid, William (Camlachie)


Davies, Stephen (Merthyr)
Jones, T. W. (Merioneth)
Rhodes, H.


de Freitas, Geoffrey
Keenan, W.
Richards, R.


Deer, G.
Key, Rt. Hon. C. W
Robens, Rt. Hon. A.


Delargy, H. J.
King, Dr. H. M.
Robinson, Kenneth (St. Pancras, N.)


Dodds, N. N.
Kinley, J.
Rogers, George (Kensington, N.)


Donnelly, D. L.
Lee, Frederick (Newton)
Ross, William


Driberg, T. E. N.
Lever, Leslie (Ardwick)
Royle, C.


Dugdale, Rt. Hon. John (W Bromwich)
Lewis, Arthur
Shackleton, E. A. A


Ede, Rt. Hon. J. C.
Lindgren, G. S.
Short, E. W.


Edelman, M.
Logan, D. G.
Simmons, C. J. (Brierley Hill)


Edwards, Rt. Hon. Ness (Caerphilly)
MacColl, J. E
Skeffington, A. M.


Edwards, W. J. (Stepney)
McGhee, H. G.
Slater, Mrs. H. (Stoke-on-Trent)


Evans, Albert (Islington, S. W.)
McGovern, J.
Slater, J. (Durham, Sedgefield)


Evans, Edward (Lowestoft)
McInnes, J.
Smith, Ellis (Stoke, S.)


Evans, Stanley (Wednesbury)
McKay, John (Wallsend)
Smith, Norman (Nottingham, S.)




Sorensen, R. W.
Tomney, F.
Wilkins, W. A.


Soskice, Rt. Hon. Sir Frank
Ungoed-Thomas, Sir Lynn
Willey, F. T.


Sparks, J. A.
Usborne, H. C.
Williams, David (Neath)


Stewart, Michael (Fulham, E.)
Viant, S. P.
Williams, Rev. Llywelyn (Abertillery)


Stakes, Rt. Hon. R. R.
Wallace, H. W.
Williams, Rt. Hon. Thomas (Don V'll'y)


Strachey, Rt. Hon. J.
Webb, Rt. Hon. M. (Bradford, C.)
Williams, W. R. (Droylsden)


Summerskill, Rt. Hon. E
Weitzman, D.
Wilson, Rt. Hon. Harold (Huyton)


Swingler, S. T.
Wells, Percy (Faversham)
Winterbottom, Richard (Brightside)


Sylvester, G. O.
West, D. G.
Woodburn, Rt. Hon. A.


Taylor, Bernard (Mansfield)
Wheeldon, W. E.
Yates, V. F.


Taylor, John (West Lothian)
White, Mrs. Eirene (E. Flint)
Younger, Rt. Hon. K.


Taylor, Rt. Hon. Robert (Morpeth)
White, Henry (Derbyshire, N.E.)



Thomas, David (Aberdare)
Whiteley, Rt. Hon. W.
TELLERS FOR THE AYES:


Thomson, George (Dundee, E.)
Wigg, George
Mr. Pearson and Mr. Arthur Allen.


Timmons, J.
Wilcock, Group Capt. C. A. B.





NOES


Aitken, W. T.
Finlay, Graeme
McCallum, Major D.


Allan, R. A. (Paddington, S.)
Fisher, Nigel
McCorquodale, Rt. Hon. M. S.


Alport, C. J. M.
Fleetwood-Hesketh, R. F.
Macdonald, Sir Peter


Amory, Heathcoat (Tiverton)
Fletcher-Cooke, C.
McKibbin, A. J.


Anstruther-Gray, Major W. J.
Ford, Mrs. Patricia
Mackie, J. H. (Galloway)


Arbuthnot, John
Fort, R.
Maclay, Rt. Hon. John


Ashton, H. (Chelmsford)
Fraser, Sir Ian (Morecambe & Lonsdale)
Maclean, Fitzroy


Assheton, Rt. Hon. R. (Blackburn, W.)
Fyfe, Rt. Hon. Sir David Maxwell
Macleod, Rt. Hon. Iain (Enfield, W.)


Astor, Hon. J. J.
Galbraith, Rt. Hon. T. D. (Pollok)
MacLeod, John (Ross and Cromarty)


Baker, P. A. D.
Galbraith, T. G. D. (Hillhead)
Macpharson, Niall (Dumfries)


Baldock, Lt.-Cmdr. J. M.
Gammans, L. D.
Maitland, Patrick (Lanark)


Baldwin, A. E.
George, Rt. Hon. Maj. G. Lloyd
Manningham-Buller, Sir R. E.


Banks, Col. C.
Godber, J. B.
Markham, Major Sir Frank


Barber, Anthony
Gough, C. F. H.
Marlowe, A. A. H.


Baxter, A. B.
Gower, H. R.
Marples, A. E.


Bell, Ronald (Bucks, S.)
Graham, Sir Fergus
Marshall, Sir Sidney (Sutton)


Bennett, F. M. (Reading, N.)
Gridley, Sir Arnold
Maude, Angus


Bennett, Dr. Reginald (Gosport)
Grimond, J.
Maudling, R.


Bennett, William (Woodside)
Grimston, Hon. John (St. Albans)
Maydon, Lt.-Comdr. S. L. C.


Bevins, J. R. (Toxteth)
Grimston, Sir Robert (Westbury)
Medlicott, Brig. F.


Birch, Nigel
Hall, John (Wycombe)
Mellor, Sir John


Bowen, E. R.
Harden, J. R. E.
Molson, A. H. E.


Boyd-Carpenter, J. A.
Hare, Hon. J. H.
Moore, Lt.-Col. Sir Thomas


Boyle, Sir Edward
Harris, Frederic (Croydon, N.)
Mott-Radclyffe, C. E.


Braine, B. R.
Harrison, Col. J. H. (Eye)
Nabarro, G. D. N.


Braithwaite, Sir Albert (Harrow, W.)
Harvey, Air Cdre. A. V. (Macclesfield)
Neave, Airey


Braithwaite, Lt.-Cdr. G. (Bristol, N. W.)
Harvey, Ian (Harrow, E.)
Nicholls, Harmar


Bromley-Davenport, Lt.-Col. W. H.
Harvie-Watt, Sir George
Nicholson, Godfrey (Farnham)


Brooke, Henry (Hampstead)
Hay, John
Nicolson, Nigel (Bournemouth, E.)


Brooman-While, R. C.
Heald, Sir Lionel
Nield, Basil (Chester)


Browne, Jack (Govan)
Heath, Edward
Nutting, Anthony


Buchan-Hepburn, Rt. Hon. P. G. T.
Higgs, J. M. C.
Oakshott, H. D.


Bullard, D. G.
Hill, Dr. Charles (Luton)
O'Neill, Phelim (Co. Antrim, N.)


Bullus, Wing Commander E. E.
Hill, Mrs. E. (Wythenshawe)
Ormsby-Gore, Hon. W. D.


Burden, F. F. A.
Hinchingbrooke, Viscount
Orr, Capt. L. P. S.


Butler, Rt. Hon. R. A. (Saffron Walden)
Hirst, Geoffrey
Orr-Ewing, Charles Ian (Hendon, N.)


Campbell, Sir David
Holland-Martin, C. J.
Orr-Ewing, Sir Ian (Weston-super-Mare)


Carr, Robert
Hollis, M. C.
Osborne, C.


Cary, Sir Robert
Holmes, Sir Stanley (Harwich)
Partridge, E


Channon, H.
Holt, A. F.
Peake, Rt. Hon. O.


Clarke, Brig. Terence (Portsmouth, W.)
Hope, Lord John
Peto, Brig. C. H. M.


Clyde, Rt. Hon. J. L.
Hornsby-Smith, Miss M. P
Pickthorn, K. W. M.


Cole, Norman
Horobin, I. M.
Pilkington, Capt. R. A.


Colegate, W. A.
Horsbrugh, Rt. Hon. Florence
Pitman, I. J.


Conant, Maj. R. J. E.
Howard, Hon. Greville (St. Ives)
Pitt, Miss E. M.


Cooper-Key, E. M.
Hudson, Sir Austin (Lewisham, N.)
Powell, J. Enoch


Craddock, Beresford (Spelthorne)
Hudson, W. R. A. (Hull, N.)
Price, Henry (Lewisham, W.)


Crookshank, Capt. Rt. Hon. H. F. C.
Hutchinson, Sir Geoffrey (Ilford, N.)
Prior-Palmer, Brig. O. L


Crosthwaite-Eyre, Col. O. E.
Hutchison, Lt.-Com. Clark (E'b'rgh, W.)
Profumo, J. D.


Crouch, R. F.
Hyde, Lt.-Col. H. M.
Raikes, Sir Victor


Crowder, Sir John (Finchley)
Hylton-Foster, H. B. H
Rayner, Brig. R


Crowder, Petre (Ruislip—Northwood)
Johnson, Eric (Blackley)
Redmayne, M.


Cuthbert, W. N.
Joynson-Hicks, Horn L. W
Rees-Davies, W. R.


Darling, Sir William (Edinburgh, S.)
Keeling, Sir Edward
Remnant, Hon. P.


Davidson, Viscountess
Kerr, H. W.
Renton, D. L. M


Deedes, W. F.
Lambton, Viscount
Roberts, Peter (Heeley)


Digby, S. Wingfield
Langford-Holt, J. A.
Robertson, Sir David


Donaldson, Cmdr. C. E. McA.
Law, Rt. Hon. R. K
Robinson, Roland (Blackpool, S.)


Donner, Sir P. W.
Leather, E. H. C.
Rodgers, John (Sevenoaks)


Doughty, C. J. A.
Legge-Bourke, Maj. E. A. H.
Roper, Sir Harold


Douglas-Hamilton, Lord Malcolm
Legh, Hon. Peter (Petersfield)
Ropner, Col. Sir Leonard


Drayson, G. B.
Lindsay, Martin
Russell, R. S.


Drewe, Sir C.
Linstead, Sir H. N.
Ryder, Capt. R. E. D.


Duncan, Capt. J. A. L.
Llewellyn, D. T.
Scott, R. Donald


Duthie, W. S.
Lloyd, Maj. Sir Guy (Renfrew, E.)
Scott-Miller, Cmdr. R.


Eccles, Rt. Hon. Sir D. M
Lockwood, Lt.-Col. J. C.
Shepherd, William


Erroll, F. J-.
Lucas, P. B. (Brentford)
Simon, J. E. S. (Middlesbrough, W.)


Fell, A.
Lucas-Tooth, Sir Hugh
Smithers, Peter (Winchester)







Smithers, Sir Waldron (Orpington)
Teeling, W.
Wakefield, Sir Wavell (St. Marylebone)


Smyth, Brig. J. G. (Norwood)
Thomas, Rt. Hon. J. P. L. (Hereford)
Walker-Smith, D. C.


Snadden, W. McN.
Thomas, Leslie (Canterbury)
Ward, Hon. George (Worcester)


Spearman, A. C. M.
Thompson, Kenneth (Walton)
Ward, Miss I. (Tynemouth)


Speir, R. M.
Thompson, Lt.-Cdr. R. (Croydon, W.)
Waterhouse, Capt. Rt. Hon. C.


Stanley, Capt. Hon. Richard
Thorneycroft, Rt. Hn. Peter (Monmouth)
Webbe, Sir H. (London & Westminster)


Stevens, G. P.
Touche, Sir Gordon
Wellwood, W.


Steward, W. A. (Woolwich, W.)
Turner, H. F. L.
Williams, Rt. Hon. Charles (Torquay)


Stewart, Henderson (Fife, E.)
Turton, R. H.
Williams, Sir Herbert (Croydon, E.)


Stoddart-Scott, Col. M.
Tweedsmuir, Lady
Williams, Paul (Sunderland, S.)


Storey, S.
Vane, W. M. F.
Williams, R. Dudley (Exeter)


Strauss, Henry (Norwich, S.)
Vaughan-Morgan, J. K
Wilson, Geoffrey (Truro)


Stuart, Rt. Hon. James (Moray)
Vosper, D. F.



Sutcliffe, Sir Harold
Wade, D. W.
TELLERS FOR THE NOES:


Taylor, William (Bradford, N.)
Wakefield, Edward (Derbyshire, W.)
Mr. Kaberry and Mr. Wills.

New Clause.—(REBATE FOR DIESEL OIL.)

As from the fifteenth day of April, nineteen hundred and fifty-three, there shall be allowed from the duties of Customs and Excise a rebate of sixpence a gallon on diesel oil.—[Mr. Pargiter.]

Brought up, and read the First time.

Mr. G. A. Pargiter: I beg to move, "That the Clause be read a Second time."
There are precedents for the sort of discrimination which this Clause seeks to make. I find that even with the introduction of the first fuel tax, in 1909, there was an allowance of half the rate of duty for goods traffic, passenger transport and also for doctors. As far back as then it was recognised that it was undesirable to tax industry in this particular form. It is because now, perhaps more than ever, we need to give as much aid as possible to industry, that I am pressing very strongly on the Chancellor the need to do something on the lines suggested by this Clause, and I hope that he will accept it.
The history of this tax is very interesting. In 1921, it was found that the tax could be abolished altogether; in 1928, it was reintroduced specially to provide for the relief of industry, arising from the de-rating provisions. It was thought at that time that because those who used motor cars or vehicles generally were more prosperous than basic industries they could afford to provide some compensation, and there may be something in that argument. It was also done to encourage coal consumption, because at one period duty had to be paid on heavy as well as light hydrocarbon oils.
In 1933, the tax was only 1d. a gallon on fuel oil, as against a much higher tax on petrol. In 1935, fuel for road vehicles was brought into the same rate of taxation, very largely because, under the impetus of the reduced fuel tax, design and development had gone ahead very

rapidly and, as a consequence, there was a very great increase in the consumption of fuel oil. The Chancellor of the day, in my view very unwisely, decided to take advantage of that situation to provide himself with extra revenue.
Taking the fuel tax and the motor vehicle tax generally, it is fair to say that Britons are among the highest-taxed motor vehicle owners in the world. That must obviously be a cause of some concern at present. I do not know how many meetings are going on here, but I really cannot make myself heard. [HON. MEMBERS: "Order."] The effect of taxation now is, of course, to add an additional burden on production. The weight of the tax all the time has meant an additional burden on production.
9.15 p.m.
We are being urged to make lower prices to compete in world markets. It is up to the Chancellor to set an example. The tax on fuel oil is a tax which applies most particularly to those goods. Passenger transport vehicles in the main are driven with diesel engines. Heavy road vehicles, which constitute an important link in industry, are almost exclusively now driven by oil engines. Consequently, any relief given to the taxation on their fuel would mean a direct relief to industry as a whole. Therefore, the proposal ought to commend itself to the Chancellor.
The tax on fuel oil has had the effect of stultifying development. I would cite, for instance, the farm tractor. Just before the war when the mechanisation of farming was proceeding very rapidly, instead of using the diesel oil engine tractor of that particular time, farmers used an engine that was devised that was worked by vaporised oil because the oil it consumed was free of tax. It was a much less efficient engine, but it was used. Again, now that diesel oil engines


are being developed because the other engine proved less efficient, but farming suffered from having the less efficient tractors because the farmers wanted an engine that would avoid fuel tax. At this time anything that nullifies or stultifies development ought to be removed.
We want to go still further in designing oil driven engines which are more efficient than petrol driven engines. If it is proved that they are, and that for them we need import less fuel than for petrol driven engines, there is a case for developing that kind of engine. This applies to other types of machinery as well. If that is the case we should expect the Government to encourage the design of those engines.
I believe that our designers, if they had the incentive of a tax rebate, would be giving consideration to designing oil engines even for light cars; certainly, for larger light cars if not necessarily for the smaller ones. That, I imagine, would give us a very important lead in world markets at the present time. If we can produce something more economical than the petrol driven engine it will certainly attract the motorists, who are fuel minded nowadays because of the high prices of petrol in most countries at the present time. Anything we could do in that direction would be of great advantage to exports as a whole.
Another consideration is that any tax on a basic material at any time has a cumulative effect on final costs. It cannot be avoided. It always happens. That is why, in the main, I think, it has been the policy of Governments to avoid placing taxes on basic materials, because of their cumulative effect, which is undefinable but inevitable, with the ultimate result that the tax is increased several times by the time an article reaches the final purchaser paying the final price.
I do not know whether it is realised, but it ought to be, that fuel oil certainly is not a luxury. It may be argued that petrol used for private motoring is a luxury, but used for other purposes it is certainly not, and yet we find that taxation in this field is far higher than is Purchase Tax on luxury articles. There is no logic in that. If luxury articles can have the tax on them reduced at the present time, why should we not give a

rebate of tax on fuel oil so that industry can benefit?
The arguments in favour of this proposal have been advanced often before, and I need not detain the House with a lengthy development of the case and of all the advantages. If something could be done to encourage the use of fuel oil it would be a distinct advantage to industry generally. It might not help to bring the passenger transport fares down, but it would be a factor in preventing a rise in fares. That, again, is having a very direct effect on the cost of living, wage demands and so on.
As I have said, these arguments have been fully-developed and must be well-known to the Financial Secretary. Therefore, it is only a question of whether he is prepared to heed the very important message which all these things convey to him, and I can only express the hope that he will make this modest remission for which we are asking in order that benefits to industry, to the export trade and to the home market may be achieved to some extent as a result.

Mr. Ernest Davies: I beg to second the Motion.
During the Committee stage, there was a brief debate, rather late in the evening, on a somewhat similar Clause for a rebate of 6d. on heavy oil used by public service vehicles. This new Clause, which has been so convincingly moved by my hon. Friend the Member for Southall (Mr. Pargiter), is intended to cover the use of diesel oil for all vehicles. When the Financial Secretary was replying to that debate, in effect, he produced only two arguments against that new Clause.
One was that it would be discriminatory, and the second was that it would be expensive. First, as regards its being discriminatory, my hon. Friend pointed out that in the early days of the petrol tax there was no tax at all on diesel oil for vehicles. That is to say, that this discrimination was imposed by the Finance Act, 1928, which was the second time that the petrol tax was imposed. The Finance Act, 1928, imposed 4d. a gallon on petrol and no rebate was allowed on petrol for use by hackney vehicles as was allowed in the earlier 1909 Act, but the full 4d. rebate was allowed on heavy oil. That rebate on heavy oil was carried on, and in 1931 when the petrol tax was increased to 8d.


the rebate of the full 8d. was allowed on heavy oil. It was later that the rebate on heavy oil was reduced to 7d. Only in 1935 was the position changed so that heavy oil was subject to the same tax as light oil.
It was found quite administratively possible to have this rebate on diesel oil at that time. It is administratively possible because a rebate can be administered readily on audited certificates of consumption. The Financial Secretary adduced the argument that it was very largely urban buses and coaches which used diesel oil these days and country buses were inclined to run on petrol, and that therefore this would discriminate in favour of the town as against the country. If he has examined the figures a little more closely, as I hope he has done since the Committee stage, he will find that argument does not hold. He should always appreciate that under the present organisation of the transport industry there is averaging as between country and town, and it is only in very rare cases that there is a separate bus company which is serving the country and not also operating in the urban areas. There is an averaging of cost and an averaging of fares. In fact, it is the urban services generally which pay for the less remunerative country services, and, incidentally, it is one of the great advantages of municipal and public ownership which enables that to be done.
But when we come to the cost, it is difficult to work out. Perhaps the Financial Secretary has gone into what would be the cost of the new Clause. As far as I can make out, there is roughly a consumption of six gallons of light oil to one gallon of heavy oil. That is to say, the 6d. rebate would apply to only one-seventh of the taxable fuel used in road vehicles. Perhaps the Financial Secretary will confirm whether that is correct or not.
I deduce this largely from some figures which the Financial Secretary gave yesterday in a written reply to the hon. and gallant Member for Knutsford (Lieut.-Colonel Bromley-Davenport). In column 67 of today's OFFICIAL REPORT the Financial Secretary gave a series of figures and stated that the total receipts in duty on light oils was about £228 million and on heavy oils £36 million and the Excise Duty on light oils was £9

million and on heavy oils some £2 million. If those figures are added together, we get a figure for light oils of about £238 million and for heavy oils practically £39 million. That shows, incidentally, the very heavy tax on fuel used in road vehicles today.
Those figures show that the heavy oil consumption is roughly one-seventh of the total. That means that the 6d. rebate on a seventh of the total consumption of 318,750,000 gallons per year would cost about £8 million. The Financial Secretary will no doubt say that a concession of £8 million cannot possibly be granted, but when the benefit which would accrue to the community from such a concession is appreciated he ought to consider it. Unquestionably, by far the greatest proportion of the concession would accrue to the travelling public. It would be very important to the road passenger, because there has been a steady increase in the use of diesel oil as opposed to light oil in road passenger vehicles. My hon. Friend touched upon that, and all the figures which have been published in recent years show the very steady rise in the substitution of diesel fuel vehicles for petrol operated vehicles.
The latest Ministry of Transport figures—they are regrettably behind the times—relating to a census taken in September, 1951, show that out of 132,000 hackney vehicles—which include not only omnibuses and coaches but also taxis—there were some 76,000 petrol vehicles and 55,000 diesel vehicles. Since then the substitution has been proceeding steadily and the proportion is today far more favourable to diesel vehicles than it was some 18 months ago.
If we take simply the figures for omnibuses and coaches, we find that some 78,000 were operating and that no fewer than three-fifths of them were large vehicles operating on diesel fuel. Thus, if we compare not the number of petrol vehicles with the number of diesel vehicles but the carrying capacities of the vehicles, there is a far greater total carrying capacity of diesel vehicles than of petrol vehicles, and that is what is important. Of the same 55,000 diesel vehicles no fewer than 30,000 had between 48 to 56 seats whereas there were some 400 fewer petrol vehicles with that number of seats operating according to the Ministry of Transport statistics.
9.30 p.m.
If one bears that in mind one realises that the incidence of this rebate would affect a far greater number of passengers and passenger journeys by bus and coach. This would appear from a comparison simply of the figures of the number of petrol driven vehicles and the number of diesel fuel vehicles. In other words, the effect on the travelling public would be far higher than appears on the surface and of considerable advantage to them.
We all know the way that fares have been going up in recent years, and each time, of course, that the petrol tax has been increased so it has been followed inevitably by a rise in fares. While none of us would suggest that other factors are not also responsible and that this small rebate could not possibly lead to a reduction in fares or perhaps prevent some further increase, it might assist in halting the upward trend in fares, which we all regret and which has to be stopped at some stage.
In the case of London Transport this 6d. rebate would effect a saving in fuel costs of some £900,000. That is a little less than one-quarter of the increased revenue which they are seeking before the Transport Tribunal, and whose Report appears to have been somewhat delayed. We are all anxiously awaiting it. I suggest to the Financial Secretary that serious consideration should be given to this new Clause because it would enable the Government to redeem themselves to a very slight extent from their terrible record over this question of transport costs and transport fares.
We all recall the Government's interference in 1952 with the Transport Commission, and the admission of the Prime Minister himself that there were political considerations involved. It happened to coincide with the municipal elections in London, and the Prime Minister blatantly admitted that it had some influence upon his decision in the matter. That interference by the Government meant a temporary saving in fares to the travelling public of £1¼ million per annum, but at the very same time as the Government were interfering with the Transport Commission and preventing them from implementing the Transport Tribunal's Report to the extent of £1¼ million, the Chancellor put on an additional tax of 7½d. on petrol which offset completely that £1¼ million.

The 7½d. additional tax cost London Transport practically the same as the Government insisted they should reduce the fares.
That, of course, had the inevitable result that we on this side predicted, for within a very few months London Transport Executive had to go to the Transport Tribunal and ask for a further increase in fares, and the Tribunal is about to report upon that. Not only did this increased petrol tax of 7½d. cost London Transport Executive £1¼ million, but it cost the Transport Commission £1 million through their undertakings of Tillings and Incorporated Provincial Buses, while in Scotland the buses operated by the Commission cost another £500,000. They were not then arguing for the concession of the full 7½d. imposed. We are only asking for the remission of 6d. on diesel oil. If that were conceded by the Government it would be a small recompense to the Transport Commission as well as to the rest of the transport undertakings of this country.
Many of them are local authorities, because a large section of the local passenger services are operated by the municipalities and they have been faced, since the increased costs and the further rise in the petrol tax a year ago, with grave difficulties. They have either had to raise their fares or to reduce their contribution to the rates, or to allow a deficit to accumulate. Perhaps it is not always appreciated that in a large number of cases the municipalities are able to relieve the rates to the extent of the surpluses which are made on their transport operations. In some cases, of course, there are deficits and the ratepayer pays, but on balance, up till recently, there has been a net gain to the ratepayers through the successful operation of municipal transport. Thanks, however, to the increase in the petrol tax, that situation is not as favourable as it was, so this concession by the Government would also assist the municipalities who operate their own undertakings.
Further, if this proposed new Clause were accepted it would assist the road haulage industry but here the percentage of vehicles operating on diesel oil is much less than in the case of the road passenger service. In fact there were in September, 1951, 43,000 diesel-operated goods vehicles compared with 900,000 goods


vehicles on the roads, so the proportion is not high. That only emphasises the point I am making that this concession would benefit so much more the travelling public, and that was the reason why it was put down.
I want to refer to the fact, to which this new Clause is relevant, that Britain is lagging behind a large number of countries in the amount of money spent on road construction today and for which these taxes were originally imposed. Today we are a very heavily taxed country as far as fuel and motor vehicles are concerned, and yet we are spending far less on road construction than are most of the countries in Western Europe. I have gone to some trouble to ascertain the figures and I find that in the United Kingdom we are spending today only about £1 per head per annum on road maintenance and construction——

Mr. Speaker: I do not think road maintenance comes into this new Clause.

Mr. Davies: With all respect, Mr. Speaker, my reason for introducing this aspect of the matter is that this tax, in respect of which we are asking that there should be some concession, was imposed for the purpose of maintaining the roads of this country and to enable construction, but I will bow to your Ruling. All I will say is that if this concession were made by the Government it would in no way affect the amount of money which would be spent on our roads, because so much more is being realised in tax than is being put to the purpose for which it was originally imposed.
The petrol taxes and the other taxes on vehicles have become a penal imposition on transport and they are not being spent for the purpose for which they were imposed. Their incidence on the community is great and they have a cumulative effect because the cost of transport enters into so many stages of production and consumption.
In seconding the new Clause, I therefore urge upon the Financial Secretary to consider whether the cost is not so great that it could be conceded and that the result of conceding it would accrue to the community in such a way that it would be well worth while.

Mr. David Jones: In supporting what my hon. Friends have said in introducing the Clause, I want, first, to refer to one at least of the arguments used by the Financial Secretary, on the last occasion when this matter was debated in Committee, for rejecting a Clause with much narrower limits. The hon. Gentleman suggested that it would be quite wrong to differentiate between two different classes of user of this form of fuel. He did not seek to tell us—I hope he will do so tonight—why it is necessary to impose all this taxation on passenger carrying road vehicles that use diesel oil whereas passenger carrying railway vehicles are given a rebate from the tax.
The hon. Gentleman is not being consistent with the pleas of his right hon. Friend. Last Saturday, as I understand, the Chancellor of the Exchequer, in painting the picture of the economic future of the country, said that we ought to be steady. Very many municipalities up and down the country, because of the circumstances revealed by their 1952–53 balance sheets, are already making preparations, to go to the licensing authorities with applications to increase their fares. Figures published recently by the Municipal Passenger Transport Association show that at least 64 municipalities, operating mainly vehicles with diesel oil engines, have greater deficits at the end of their financial year in 1953 than in 1952.
I agree with my hon. Friend the Member for Enfield, East (Mr. Ernest Davies) that that deficit is not all due to the increase in the tax on fuel, but a very substantial proportion of it is due to that reason. Because of the increasing deficiencies in their annual accounts, the municipalities are having to go to the licensing authorities to secure increases in fares. That, in turn, is bound to mean that the workpeople, at least, and the business people who have to use these municipal buses day by day to and from their work, will use that as an added argument for an increase in wages because of the increased cost of travel. So the vicious circle continues. The Government would be wise at this time if they were carefully to examine this position from the point of view of the diesel engine road vehicles.
The argument was advanced during the Committee stage that it would not


be proper to regard passenger carrying vehicles using diesel oil as being in a special category. To meet the complaint of the Financial Secretary on that occasion, the present Clause has been widened to embrace the goods carrying vehicles.
9.45 p.m.
I do not want to enter into arguments advanced by my hon. Friend the Member for Southall (Mr. Pargiter), but it is true that municipalities particularly, and other passenger undertakings also, have increasingly developed the diesel engine because of its greater efficiency in operation. The initial cost of securing those vehicles in the first instance has been greater than securing petrol engines and the initial cost of purchasing diesel buses has been considerably higher than that of petrol buses, but in the long run they serve a useful purpose and give a greater degree of efficiency. In their own interest, if they are anxious to encourage efficiency in industry, the Government ought to regard that development as deserving of consideration in the taxation of this form of fuel.
The hon. Gentleman argued on the last occasion that a rebate of 6d. per gallon on diesel oil would not make any substantial difference in the fares to be charged, but it would at least make a substantial contribution towards reducing the overall costs of operating these services and would be a gesture by the Chancellor in support of the principle we adumbrated last Saturday afternoon. I appeal to the Financial Secretary to give this matter careful consideration because in all the circumstances this new Clause is fully justified

Mr. A. G. Bottomley: My constituents, like those in other constituencies represented in this House, are concerned with all matters presented in the Finance Bill. Of all the communications I have had most have been as a result of this new Clause. Perhaps my division is in many ways very transport-minded. Constituents are aware of the great difficulties caused by the bottleneck which leads into Rochester, about which I spoke in the House last week, and also of the transport problems arising from the terrible accident in Chatham some time ago.
I have been pressed by the local authorities to say that one of the burdens

they have to carry today arises from the high charges and the high price of fuel. I have had representations of all kinds that something should be done to bring down the cost of fuel in such a way as would have a two-fold effect. It would enable fares in transport services to be reduced and I am sure that many hon. Members share the feeling that fares of transport undertakings today are preposterous.
Constituents have complained to me of the amount they have to spend on fares. It is not necessary to remind the House that many have to travel from Chatham to London. Trains are overcrowded and many resort to buses. At one time that was a cheap method of travelling, but it is not so now. If it were possible to reduce the tax on fuel it would make that method of transport cheaper and better for all concerned.
Municipal authorities, not only in my division, but throughout the country, are troubled about charges imposed upon them as a result of rendering municipal services. That is not only true of municipalities but of industry as a whole. If one went into the overhead costs of industry it would be found that a large proportion is in respect of fuel.
I would, therefore, endorse the appeal of my colleagues that everything possible should be done to make an adjustment for the two-fold purpose of reducing the charges to the travelling public and the overhead costs to industry. In that way we shall be able to achieve what the Government have not yet been able to do—stop the rising cost of living. We shall help industry to produce cheaper goods, which would assist our export market. Although I have advanced arguments form a constituency point of view this is a national as well as a local problem.

Mr. Boyd-Carpenter: The hon. Member for Southall (Mr. Pargiter) moved an Amendment during the Committee stage which was somewhat similar to this new Clause and, with rather engaging frankness, admitted that the one of his two Amendments which was selected was not his favourite. He did not this evening tell us whether this new Clause is his favourite. The difference between the two is that whereas his Committee stage Amendment sought to grant this rebate for diesel fuel used in the operation of


passenger vehicles, this Clause would have the effect of giving a rebate in respect of diesel fuel used in all road vehicles, whether passenger or goods.
I pointed out during the Committee stage that one of the difficulties facing the mover of a proposal like this is that it is all but inevitable that it will involve either striking anomalies or excessive costs. It would appear to me that this Clause embodies both. As the hon. Member for Enfield East, (Mr. Ernest Davies) correctly worked out, the cost would be £8 million in a full year. That is a very substantial figure, and is not made less substantial when, in a speech advocating it, the hon. Member, at the same time, advocated increased expenditure. In any event, a diminution of revenue of about £8 million this year, over and above the concessions which my right hon. Friend has made, is, I am afraid, an impossible barrier to accepting the argument of the hon. Gentleman.
In this proposal there would not be the discrimination evident in the original proposal, that the rebate would be for diesel propelled passenger vehicles as opposed to other diesel propelled vehicles. This proposes a discrimination in favour of diesel operated vehicles, both passenger and goods, against petrol operated vehicles of all kinds. It would operate somewhat differently. As the hon. Gentleman pointed out, the diesel propelled vehicle is the predominant passenger vehicle. Most of the modern passenger vehicles, particularly those in great cities, are diesel driven.
The hon. Member for The Hartlepools (Mr. D. Jones) appeared to overlook the fact that petrol driven passenger vehicles are used in the countryside. The hon. Member for Enfield, East was quite wrong in seeking to counter that argument by saying that country buses were operated by combines who also operated urban buses. It is the case from my experience that country transport is provided by small operators with petrol driven vehicles, who are sometimes in competition with diesel propelled vehicles from the nearest town.
With taxation so high we must bear in mind that the load must be fairly distributed and that to create anomalies of this kind requires a great deal of justification.

Mr. Pargiter: Would the hon. Gentleman say how many of these petrol driven buses there are operating on country roads because, from my observation and experience, there are very few indeed?

Mr. Boyd-Carpenter: I travel in one from time to time. It is very uncomfortable. I cannot give figures, but I think that the House will accept that, be they substantial or less substantial, there are some of them. For the purpose of my argument I do not think that the precise numbers matter at all.
The hon. Member for Enfield, and the hon. Member for Southall raised the most important subject of fares. I will not be tempted to follow them into an analysis of passenger fares. If I did I might be tempted to a considerable extent beyond the bounds of order, but I must point out that the question of fares is not affected in any very substantial degree by this proposal. As I pointed out during the Committee stage this proposal, if adopted, would reduce the cost of operation by the equivalent of one-tenth of a penny on a 3d. fare.

Mr. Ernest Davies: Will the hon. Gentleman explain why the Government intervened in connection with passenger fares in London to save the London traveller £1,250,000 when this would save the travelling public almost £1 million? Why is £1,250,000 important and £1 million not?

Mr. Boyd-Carpenter: I should certainly not be permitted to enter into a discussion with the hon. Gentleman as to the action of the Government in respect of the proposed increase in fares, though that was an action which I hope I may be allowed to say was warmly approved by public opinion.
The point I am making is that the effect of this new Clause, notwithstanding its substantial cost to public funds, would be equivalent only to one-tenth of a penny on a 3d. fare. There may be marginal cases where that one-tenth of a penny may make a difference between an increase in fare or not. Obviously, there must be a point where the smallest additional amount tips the balance in favour of an increase. I do not think that that would be frequent. When we are concerned with a substantial suggested loss of revenue, I think that the


fare argument has been very much over-stressed. [Interruption.] If the hon. Gentleman cannot distinguish between the revenue of London Transport and the revenue of the Exchequer I am surprised.

Mr. Davies: The point is that if £8 million is lost to the Exchequer £8 million are gained by the travelling public. We cannot brush aside the fact that because it means only one-tenth of a penny on a 3d. fare the public would not save that £8 million. The public would be paying £8 million less.

Mr. Boyd-Carpenter: They would only gain that £8 million if every penny of it was passed on. It was the whole essence of the hon. Gentleman's case that the bus operators needed some of this to meet their own costs. The hon. Gentleman cannot have it both ways. He cannot have it that the £8 million will be passed on to the public and that it will simultaneously relieve the needs of the bus operators.
The second discrimination is in the case of goods vehicles. About 14 per cent. of the number of goods vehicles are diesel operated. I agree that they are among the larger operators and, therefore, it is probably the case that something above 14 per cent. of actual carrying capacity is represented by them. None the less, we have here a relatively small minority. It seems to me very difficult to justify a tax discrimination in favour of one minority type of goods vehicle as compared with the great majority. Equally, that percentage does make it clear that what one or two hon. Members opposite said about the effect on industrial costs was greatly overstated, because this would not affect industrial costs in respect of six-sevenths of the vehicles operated, and is not, therefore, a very strong factor in the situation.
The discrimination seems to me to be a serious one, but I do not rest my argument upon that. I rest it on the proposition that £8 million, which is the cost of this proposal, is more than my right hon. Friend can afford in view of the other concessions which have been made, and which have been authorised by the House or by the Committee. Therefore, while I fully appreciate the force of the contentions that have been made, which have really been arguments against

the general weight of the fuel tax rather than in favour of the particular proposition in this new Clause, and that heavy taxation in this direction as in others has its patent disadvantages, I must tell the House that my right hon. Friend is not able to face the heavy loss of revenue which is involved in this proposal, and must ask the House not to accept this new Clause.

10.0 p.m.

Mr. Jay: Negative and unresponsive as the attitude of the Government has been in this debate, I must say that the Financial Secretary was nowhere so negative as in the speech which he has just made. I would add to those hon. Members who rather seem to resent my hon. Friend raising this topic that, though it may not appear of interest to them, it is of great interest to millions of people who travel in buses, and, in our view, ought to be seriously considered. Hon. Members opposite will only prolong the discussion if they try to shout down my hon. Friends when making legitimate interventions.
This is really a very modest proposal. All that is being proposed is that, of the 7d. increase made by the Government in the tax a year ago, 6d. should be remitted in the case of diesel fuel. There are two strong arguments for the proposal which my hon. Friend advanced. The first is on the grounds of the admitted superior efficiency of the diesel engine. I do not think anybody would question that the diesel engine is more efficient than the ordinary petrol engine.
Here is a case whereby taxation can give a definite stimulus and incentive to greater industrial efficiency. The Financial Secretary said that it was illegitimate or unjustifiable to discriminate in favour of the diesel engine, whether in a passenger or a commercial vehicle. But it would be just as reasonable to speak, not of discrimination in this case, but of an active stimulus to greater efficiency in this branch of engineering. I do not think that argument has been answered at all.
The second argument is that of the relief which could be given in this way to fares which so notably, particularly in London and the larger cities, enter into the cost of living, and, therefore, into wage negotiations. To my mind, it is one of the greatest weaknesses of the


present Chancellor s economic policy—most notably by the food subsidy decisions, but also by raising the petrol tax—that he contributed actively and unnecessarily to a number of wage claims, resulting in rises in wage rates and in costs and export prices, which, undoubtedly, have reacted unfavourably on our export trade in the past 18 months.
It is one of the disadvantages of this petrol tax that, on the one hand, in the present economic circumstances of the country, there are strong arguments for a reasonably high tax in so far as it affects the private motorist and some other consumers of petrol. It operates, in the absence of petrol rationing, which we all wish to be rid of in peace time, to restrain consumption of a commodity which bulks very largely in our balance of payments and still has quite a considerable dollar content.
The second argument is this. The rises in petrol taxes in recent years, in so far as they affected the private motorist, have raised revenue without inflicting so much hardship and inconvenience as alternative ways of raising the same amount of revenue might do. But to achieve these objectives one is compelled at the same time to impose, for example, a tax upon the industrial use of this fuel, and compelled, probably contrary to the wishes of the Government—this certainly applied to the earlier increases of petrol tax made by the Labour Government—to put a burden upon public service vehicles, with the possible and eventually the inevitable result of some rise in fares. That is the dilemma which faces one when dealing with the petrol tax.
The advantage of the proposed new Clause is that it enables one to raise the tax where the case is strongest, and, at the same time, to give relief in such matters as fares and, therefore, wage claims, where the inflationary spiral is likely to be affected. I do not think-that the Financial Secretary dealt with that argument, which becomes all the stronger as the tax becomes higher. It may be that, three or four years ago

when the petrol tax was so much lower, it would not have been worth the trouble and the administrative change, and so on, to introduce a differential of this kind.

The Chancellor himself said the other day, when he was rather unwarily defending his reduction in the higher rate of Purchase Tax on things like furs and jewellery, that no tax ought to stand above 100 per cent. This tax stands at more than 100 per cent. and affects an essential fuel for an essential public service. When we get to that point, especially after the increases in petrol tax in the last year or so, the argument for some discrimination is very strong.

The only reason advanced by the Financial Secretary for rejecting the proposed new Clause was that discrimination, as he called it, was undesirable. He did not say that it was impracticable. My right hon. Friend has already pointed out that discrimination exists in the case of agricultural tractors used on farms, the diesel fuel for which is exempt from tax altogether. My hon. Friend the Member for The Hartlepools (Mr. D. Jones) also said that that applies in the case of certain rail cars using diesel oil on railways. Discrimination is, therefore, already in force without, so far as I know, causing any great administrative difficulty.

We propose a modest extension of that discrimination which would have the dual effect of giving incentives to the use of an engine which is admittedly of greater efficiency, and would also restrain the further rise in passenger bus fares which is otherwise almost certainly inevitable, with all the injurious effects which are likely to follow upon wages and price levels. For these reasons, and unless the Government can advance stronger arguments to the contrary, I advise my hon. Friends to press this modest proposal to a Division.

Question put, "That the Clause be read a Second time."

The House divided: Ayes. 212: Noes, 240.

Division No. 216.]
AYES
[10.10 p.m.


Acland, Sir Richard
Bacon, Miss Alice
Beswick, F


Adams, Richard
Balfour, A.
Bing, G. H. C.


Allen, Scholefield (Crewe)
Barnes, Rt. Hen. A J
Blackburn, F.


Andereon, Alexander (Motherwell)
Bartley, P.
Blenkinsop, A


Attlee, Rt. Hon. C. R.
Bence, C. R.
Blyton, W. R.


Awbery, S. S.
Benn, Hon. Wedgwoor
Boardman, H




Bottomley, Rt. Hon. A. G.
Houghton, Douglas
Price, Joseph T. (Westhoughton)


Bowden, H. W.
Hay, J. H.
Proctor, W. T.


Braddock, Mrs. Elizabeth
Hubbard, T. F.
Pryde, D. J.


Brockway, A. F.
Hudson, James (Ealing, N.)
Pursey, Cmdr. H.


Brook, Dryden (Halifax)
Hughes, Emrys (S. Ayrshire)
Rankin, John


Broughton, Dr. A. D. D.
Hughes, Hector (Aberdeen, N.)
Reeves, J.


Brown, Rt. Hon. George (Belper)
Hynd, H. (Accrington)
Reid, Thomas (Swindon)


Burke, W. A.
Irving, W. J. (Wood Green)
Reid, William (Camlachie)


Burton, Miss F. E.
Isaacs, Rt. Hon. G. A.
Rhodes, H.


Butler, Herbert (Hackney, S.)
Janner, B.
Robens, Rt. Hon. A.


Carmichael, J.
Jay, Rt. Hon. D. P. T.
Robinson, Kenneth (St. Pancras, N.)


Castle, Mrs. B. A.
Jeger, George (Goole)
Rogers, George (Kensington, N.)


Clunie, J.
Jeger, Dr. Santo (St. Pancras, S.)
Ross, William


Coldrick, W.
Jenkins, R. H. (Stechford)
Royle, C.


Collick, P. H.
Johnson, James (Rugby)
Shackleton, E. A. A


Corbet, Mrs. Freda
Jones, David (Hartlepool)
Short, E. W.


Cove, W. G.
Jones, Frederick Elwyn (West Ham, S.)
Simmons, C. J. (Brierley Hill)


Craddock, George (Bradford, S.)
Jones, Jack (Rotherham)
Skeffington, A. M.


Crosland, C. A. R.
Jones, T. W. (Merioneth)
Slater, Mrs. H. (Stoke-on-Trent)


Crossman, R. H. S.
Keenan, W.
Slater, J. (Durham, Sedgefield)


Cullen, Mrs. A.
Key, Rt. Hon. C. W.
Smith, Ellis (Stoke, S.)


Darling, George (Hillsborough)
King, Dr. H. M.
Sorensen, R. W.


Davies, Ernest (Enfield, E.)
Lee, Frederick (Newton)
Soskice, Rt. Hon. Sir Frank


Davies, Harold (Leek)
Lever, Leslie (Ardwick)
Sparks, J. A.


Davies, Stephen (Merthyr)
Lewis, Arthur
Stewart, Michael (Fulham, E.)


de Freitas, Geoffrey
Lindgren, G. S.
Strachey, Rt. Hon. J.


Deer, G.
Logan, D. C.
Strauss, Rt. Hon. George (Vauxhall)


Delargy, H. J.
MacColl, J. E.
Summerskill, Rt. Hon. E.


Dodds, N. N.
McGhee, H. G.
Swingler, S. T.


Donnelly, D. L.
McInnes, J.
Sylvester, G. O.


Driberg, T. E. N.
McKay, John (Wallsend)
Taylor, Bernard (Mansfield)


Dugdale, Rt. Hon. John (W. Bromwich)
McLeavy, F.
Taylor, John (West Lothian)


Ede, Rt. Hon. J. C.
McNeil, Rt. Hon. H.
Taylor, Rt. Hon. Robert (Morpeth)


Edelman, M.
MacPherson, Malcolm (Stirling)
Thomas, David (Aberdare)


Edwards, Rt. Hon. John (Brighouse)
Mainwaring, W. H.
Thomson, George (Dundee, E.)


Edwards, Rt. Hon. Ness (Caerphilly)
Mallalieu, J. P. W. (Huddersfield, E.)
Thornton, E.


Edwards, W. J. (Stepney)
Mann, Mrs. Jean
Timmons, J.


Evans, Albert (Islington, S. W.)
Manuel, A. C.
Tomney, F.


Evans, Stanley (Wednesbury)
Marquand, Rt. Hon. H. A.
Ungoed-Thomas, Sir Lynn


Fernyhough, E
Mason, Roy
Usborne, H. C.


Fletcher, Eric (Islington, E.)
Mayhew, C. P.
Wallace H. W.


Foot, M. M.
Mikardo, Ian
Webb, Rt. Hon. M. (Bradford, C.)


Fraser, Thomas (Hamilton)
Mitchison, G. R.
Weitzman, D.


Freeman, John (Watford)
Monslow, W.
Wells, Percy (Faversham)


Freeman, Peter (Newport)
Moody, A. S.
Wells, William (Walsall)


Gaitskell, Rt. Hon. H. T. N.
Morgan, Dr. H. B. W.
West, D. G.


Gibson, C. W.
Morley, R.
Wheeldon, W. E.


Glanville, James
Morris, Percy (Swansea, W.)
White, Mrs. Eirene (E. Flint)


Gordon Walker, Rt. Hon. P. C.
Mort, D. L.
White, Henry (Derbyshire, N. E.)


Greenwood, Anthony (Rossendale)
Moyle, A.
Whiteley, Rt. Hon. W.


Grey, C. F.
Mulley, F. W.
Wigg, George


Hale, Leslie
Nally, W.
Wilcock, Group Capt. C. A. B


Hall, Rt. Hon. Glenvil (Colne Valley)
Neal, Harold (Bolsover)
Wilkins, W. A.


Hall, John T. (Gateshead, W.)
Noel-Baker, Rt. Hon. P. J.
Willey, F. T.


Hamilton, W. W.
Oldfield, W. H.
Williams, David (Neath)


Hannan, W.
Oliver, G. H.
Williams, Rev. Llywelyn (Abertillery)


Hargreaves, A.
Orbach, M.
Williams, W. R. (Droylsden)


Harrison, J. (Nottingham, E.)
Oswald, T.
Wilson, Rt. Hon. Harold (Huyton)


Hastings, S.
Padley, W. E.
Winterbottom, Richard (Brightside)


Hayman, F. H.
Paget, R. T.
Woodburn, Rt. Hon. A.


Henderson, Rt. Hon. A. (Rowley Regis)
Palmer, A. M. F.
Yates, V. F.


Herbison, Miss M.
Pargiter, G. A.
Younger, Rt. Hon. K.


Hewitson, Capt. M.
Paton, J.



Hobson, C. R.
Pearson, A.
TELLERS FOR THE AYES


Holman, P.
Peart, T. F.
Mr. Arthur Allen and


Holmes, Horace (Hemsworth)
Plummer, Sir Leslie
Mr. Popplewell.




NOES


Aitken, W. T.
Bennett, F. M. (Reading, N.)
Bullus, Wing Commander E. E.


Allan, R. A. (Paddington, S.)
Bennett, Dr. Reginald (Gosport)
Burden, F. F. A.


Alport, C. J. M.
Bennett, William (Woodside)
Butler, Rt. Hon. R. A. (Saffron Walden)


Amory, Heathcoat (Tiverton)
Birch, Nigel
Campbell, Sir David


Anstruther-Gray, Major W. J
Boothby, Sir R. J. G.
Carr, Robert


Arbuthnot, John
Bowen, E. R.
Cary, Sir Robert


Ashton, H. (Chelmsford)
Boyd-Carpenter, J. A.
Channon, H.


Assheton, Rt. Hon. R. (Blackburn, W.)
Boyle, Sir Edward
Clarke, Brig. Terence (Portsmouth, W.)


Astor, Hon. J. J.
Braithwaite, Sir Albert (Harrow, W.)
Clyde, Rt. Hon. J. L.


Baker, P. A. D.
Braithwaite, Lt.-Cdr. G. (Bristol, N. W.)
Cole, Norman


Baldock, Lt.-Cmdr. J. M.
Bromley-Davenport, Lt.-Col. W. H.
Colegate, W. A.


Baldwin, A. E.
Brooke, Henry (Hampstead)
Conant, Maj. R. J. E.


Banks, Col. C.
Brooman-White, R. C.
Cooper-Key, E. M.


Barber, Anthony
Browne, Jack (Govan)
Craddock, Beresford (Spelthorne)


Baxter, A. B.
Buchan-Hepburn, Rt. Hon. P. G. T.
Crookshank, Capt. Rt. Hon. H. F. C.


Bell, Ronald (Bucks, S.)
Bullard, D. G.
Crosthwaite-Eyre, Col. O. E.







Crouch, R. F
Hylton-Foster, H. B. H
Price, Henry (Lewisham, W.)


Crowder, Sir John (Finchley)
Jennings, R.
Prior-Palmer, Brig, O. L


Crowder, Petre (Ruislip—Northwood)
Johnson, Eric (Blackley)
Profumo, J. D.


Cuthbert, W. N.
Keeling, Sir Edward
Raikes, Sir Victor


Darling, Sir William (Edinburgh, S.)
Kerr, H. W.
Rayner, Brig. R.


Davidson, Viscountess
Lambton, Viscount
Redmayne, M.


Deedes, W. F.
Langford-Holt, J. A.
Rees-Davies, W. R


Digby, S. Wingfield
Law, Rt. Hon. R. K
Remnant, Hon. P.


Donaldson, Cmdr. C. E. McA.
Leather, E. H. C.
Renton, D. L. M.


Donner, Sir P. W.
Legge-Bourke, Maj. E. A. H.
Roberts, Peter (Heeley)


Doughty, C. J. A.
Legh, Hon. Peter (Petersfield)
Robertson, Sir David


Douglas-Hamilton, Lord Malcolm
Lindsay, Martin
Robinson, Roland (Blackpool, S.)


Drayson, G. B.
Linstead, Sir H. N.
Rodgers, John (Sevenoaks)


Duncan, Capt. J. A. L
Llewellyn, D. T.
Roper, Sir Harold


Erroll, F. J.
Lloyd, Maj. Sir Guy (Renfrew, E.)
Ropner, Col. Sir Leonard


Fell, A.
Lockwood, Lt.-Col. J. C.
Russell, R. S.


Finlay, Graeme
Lucas, p. B. (Brentford)
Ryder, Capt. R. E. D


Fisher, Nigel
Lucas-Tooth, Sir Hugh
Scott, R. Donald


Fleetwood-Hesketh, R. F
McCallum, Major D.
Scott-Miller, Cmdr. R


Fletcher-Cooke, C.
Macdonald, Sir Peter
Shepherd, William


Ford, Mrs. Patricia
McKibbin, A. J.
Simon, J. E. S. (Middlesbrough, W.)


Fort, R.
Mackie, J. H. (Galloway)
Smithers, Peter (Winchester)


Fraser, Hon. Hugh (Stone)
Maclay, Rt. Hon. John
Snadden, W. McN.


Fraser, Sir Ian (Morecambe &amp; Lonsdale)
Maclean, Fitzroy
Spearman, A. C. M.


Fyfe, Rt. Hon. Sir David Maxwell
Macleod, Rt. Hon. Iain (Enfield, W.)
Speir, R. M.


Galbraith, Rt. Hon. T. D. (Pollok)
MacLeod, John (Ross and Cromarty)
Stanley, Capt. Hon. Richard


Gammans, L. D.
Macpherson, Niall (Dumfries)
Stevens, G. P


George, Rt. Hon. Maj. G. Lloyd
Maitland, Patrick (Lanark)
Steward, W. A. (Woolwich, W.)


Godber, J. B.
Manningham-Buller, Sir R. E.
Stewart, Henderson (Fife, E.)


Gough, C. F. H
Markham, Major Sir S. F.
Stoddart-Scott, Col. M.


Gower, H. R.
Marlowe, A. A. H.
Storey, S.


Graham, Sir Fergus
Marples, A. E.
Strauss, Henry (Norwich, S.)


Grimond, J.
Marshall, Sir Sidney (Sutton)
Stuart, Rt. Hon. James (Moray)


Grimston, Hon. John (St. Albans)
Maude, Angus
Sutcliffe, Sir Harold


Grimston, Sir Robert (Westbury)
Maudling, R.
Taylor, William (Bradford, N.)


Hall, John (Wycombe)
Maydon, Lt.-Comdr. S. L. C.
Teeling, W.


Harden, J. R. E.
Medlicott, Brig. F.
Thomas, Rt. Hon. J. P. L. (Hereford)


Hare. Hon. J. H.
Mellor, Sir John
Thomas, Leslie (Canterbury)


Harris, Frederic (Croydon, N)
Malson, A. H. E.
Thompson, Kenneth (Walton)


Harris, Reader (Heston)
Monckton, Rt. Hon. Sir Walter
Thompson, Lt.-Cdr. R. (Croydon, W.)


Harrison, Col. J. H. (Eye)
Morrison, John (Salisbury)
Thorneycroft, Rt. Hn. Peter (Monmouth)


Harvey, Air Cdre. A. V. (Macclesfield)
Mott-Radclyffe, C. E.
Touche, Sir Gordon


Harvey, Ian (Harrow, E.)
Nabarro, G. D. N.
Turner, H. F. L.


Hay, John
Neave, Airey
Turton, R. H.


Heald, Sir Lionel
Nicholls, Harmar
Tweedsmuir, Lady


Heath, Edward
Nicholson, Godfrey (Farnham)
Vane, W. M. F.


Higgs, J. M. C.
Nicolson, Nigel (Bournemouth, E.)
Vaughan-Morgan, J. K


Hill, Dr. Charles (Luton)
Nield, Basil (Chester)
Vosper, D. F.


Hill, Mrs. E. (Wythenshawe)
Nutting, Anthony
Wakefield, Edward (Derbyshire W.)


Hinchingbrooke, Viscount
Oakshott, H. D.
Wakefield, Sir Wavell (St. Marylebone)


Hirst, Geoffrey
Odey, G. W.
Walker-Smith, D. C.


Holland-Martin, C. J
O'Neill, Phelim (Co. Antrim, N.)
Ward, Hon. George (Worcester)


Hollis, M. C.
Ormsby-Gore, Hon. W. D.
Ward, Miss I. (Tynemouth)


Holmes, Sir Stanley (Harwich)
Orr, Capt. L. P. S.
Waterhouse, Capt. Rt. Hon. C.


Holt, A. F.
Orr-Ewing, Charles Ian (Hendon, N.)
Webbe, Sir H. (London & Westminster)


Hope, Lord John
Orr-Ewing, Sir Ian (Weston-super-Mare)
Wellwood, W.


Hornsby-Smith, Miss M. P
Osborne, C
Williams, Rt. Hon. Charles (Torquay)


Horobin, I. M.
Partridge, E.
Williams, Sir Herbert (Croydon, E.)


Horsbrugh, Rt. Hon. Florence
Peake, Rt. Hon. O.
Williams, Paul (Sunderland, S.)


Howard, Hon. Greville (St. Ives)
Peto, Brig. C. H. M.
Williams, R. Dudley (Exeter)


Hudson, Sir Austin (Lewisham, N.)
Pickthorn, K. W. M.
Wills, G.


Hudson, W. R. A. (Hull, N.)
Pilkington, Capt. R. A
Wilson, Geoffrey (Truro)


Hutchinson, Sir Geoffrey (Ilford, N.)
Pitman, I. J.



Hutchison, Lt.-Com. Clark (E'b'rgh, W.
Pitt, Miss E. M.



Hyde, Lt.-Col. H. M.
Powell, J. Enoch
TELLERS FOR THE NOES:




Sir Cedric Drewe and Mr. Kaberry.


Question put, and agreed to.

New Clause.—(AMENDMENT OF SECTION 149 OF CUSTOMS AND EXCISE ACT, 1952.)

Subsection (6) of section one hundred and forty-nine of the Customs and Excise Act, 1952, shall be amended by the deletion of paragraph (d) and the proviso thereto.—[Mr. Mitchison.]

Brought up, and read the First time.

Mr. G. R. Mitchison: I beg to move, "That the Clause be read a Second time." 
This Clause is designed to remove a provision in the Customs and Excise Act which restricts the quantity of spirits that may be sold at what is commonly called an off-licence. At present the law is that, in general, at an off-licence, at least a quart bottle must be sold, with a proviso that, where there is a justices' licence, the quantity may be at least a pint. The history of this rather curious piece of legislation is that the original provision was for a quart bottle, and no


less than a quart bottle; and in 1933 the rather limited concession of a pint bottle in certain circumstances was inserted.
This matter was considered by the House not so very long ago. We are now in 1953, and it was only a couple of years ago that a similar provision was sought to be introduced into the Finance Bill of that time. The course of the discussion then is interesting, and the arguments put forward for what we seek to do tonight, namely, to remove altogether the minimum quantity provision, were cogent and almost unanimous.
I propose to begin by referring to the very clear and excellent speech made on that occasion by the hon. Member for Wolverhampton South - West (Mr. Powell). He pointed out, and I should like to adopt his arguments, that this was a somewhat absurd matter because in the first place the holder of an on-licence could sell retail even the smallest quantity of spirits; and second that not only was that the case but that there was no means for the ordinary person, unless he happened to know the position, to distinguish clearly what happened. He could, for instance, go into a place where there was a restaurant—the hon. Gentleman instanced a Lyons Corner House as one—and buy a perfectly small quantity retail. To all appearances the place was the same, but at what really was an off-licence he was still bound to buy the larger quantity of a pint or a quart. In addition to that there is the further absurdity in the matter that, provided a large bottle is sold, then a very small bottle may be sold with it.
One pauses to consider for a moment the social effects of this curious piece of legislation. It seems to me that the present position is that if a person, for good or for ill—and I see my hon. Friend the Member for Ealing, North (Mr. J. Hudson) very close to me, watching attentively—wishes to buy a small quantity of spirits he is unable to do so at an off-licence, and he is, therefore, obliged to do one of two things. He must either buy a larger quantity than he needs, and proceed, in the terms of my hon. Friend, to destruction more rapidly than he otherwise would, or, in the terms of those of us who are not quite so strenuously minded in these matters, be forced to buy, at what nowadays is a very high price,

a great deal more spirits than he actually needs.
I do not believe it can be a very good result, whether looked at from the point of view of those who believe in moderation, or to those who believe in total abstention and regard even the smallest bottle as a lapse of some sort; and I should have thought, from the latter point of view, that the larger the bottle the larger the lapse, and I see no particular reason to suppose that the Gadarene swine would have gone to destruction any more rapidly if the slope had been a great deal less steep than I believe it actually was.
The other alternative is that in order to get the small bottle, if he is a person of determination, perhaps with an eye on economy, he will be obliged to go to a pub to get it—to an on-licence, as the phrase goes, and having got there he will then, with the absurdity peculiar to this legislation, be able to buy that which he was unable to buy at the other place. I cannot really see the point of that.
When this matter was canvassed before, the absurdity of this was, of course, pointed out, and it is exceedingly interesting to notice the very cogent support that was produced from both sides of the House on that occasion. The matter was raised by the hon. Member for Croydon, East (Sir H. Williams), whom I see sitting here today, and he, in rather timid language, referred to the time when he was a boy and three-star brandy cost 5s. 6d. a bottle. He had already assured the House that he had no connection with the industry except as a moderate consumer, and in that capacity he said—and I on this occasion, at least, agree with him—that the whole business was rather childish. He went on to say that it was the legislation of a lunatic asylum. That is going rather far, but there sometimes does occur, even in the licensing laws, a certain absurdity which is none the less absurd because it is founded in the history of that industry and the attempts of Parliament from time to time to deal with it.
He was followed by my hon. and gallant Friend the Member for Brixton (Lieut.-Colonel Lipton), who said that it was one of the rare occasions on which a point had been put by the hon. Member for Croydon, East which deserved consideration. I wish to disassociate myself


with any criticism of the hon. Member for Croydon, East on this occasion, because I am looking for his support both in debate and, of course, since he is a man of courage and principle, in the Lobby afterwards.
I feel certain that the hon. Member for Wolverhampton, South-West, if he were here, would find it impossible today to say the opposite, however ingeniously, of that which he said on that occasion. We also had the valuable support of two Members of the Government. First, the present Parliamentary Secretary to the Ministry of Transport gave us a little vivid reminiscence about the discussion he had had with a Somerset publican about three of his customers. He described those three customers and went on to an even more family reminiscence with which I need not trouble the House on this occasion. He then ended, in characteristic style, by saying that he did not think that the argument used by the Financial Secretary, to which I will refer in a minute, held water. He corrected himself hastily by saying, "It does not hold alcohol." I am not at all sure on mature consideration that either phrase was logical, but one sees exactly what he meant.
Then there was support from the hon. and gallant Member for Ayr (Sir T. Moore), and again one notices how widespread over the country this feeling was because we had a word or two from the former hon. Member for Bolton, West and a word from an hon. Member representing one of the Midland constituencies, and finally we had what I would really call the plum of the piece—one of those strong vigorous speeches which the present Leader of the House used to deliver when in opposition. He really put it in a way which will commend itself, I feel certain, to the Chancellor and the Economic Secretary or the Financial Secretary, whichever of them replies to the debate. He said:
The case for this new Clause is overwhelming, and the Government will have seen that there is support from all sides of the Committee for the proposition that in these days, whatever may be the history of the business, it is perfectly ridiculous that a certain number of people cannot sell smaller bottles whereas other people can sell smaller bottles.

10.30 p.m.
That is a very simple proposition, and I have no doubt that it will commend itself now as it commended itself then to those who felt that there was some absurdity in the matter.
The right hon. Gentleman went on to clinch the matter:
If nobody could sell any small bottles, there might be something to be said for the other argument. One could argue that it was dangerous to allow people to buy spirits in these minute quantities and all the rest of it. But whereas one class of licence holders can sell the smaller bottles, another class of licence holders cannot because of an accident of the law."—[OFFICIAL REPORT. 18th June. 1951; Vol. 489, c. 75.]
He went on to develop the case he had so clearly made, and that was the conclusion of the discussion.
Perhaps the most interesting part of it was the argument put up by my right hon Friend the Member for Battersea. North (Mr. Jay). He was most sympathetic. Clearly he had his heart in the small bottle. But he could not go quite so far. Reading through the speeches—there were two or three of them—it is clear that he was merely deferring the matter. This was 1951, and my right hon. Friend felt that
… on the whole the case had not been made out in present circumstances …
but that was before further pressure had been put upon him, and his last words were:
In the course of the next year I see no reason why we should not hold similar consultations …
In a minute or two I will say what those consultations were to be.
… and if there were to be any sort of agreement whereby the conflict would be diminished, then, of course, a different situation would certainly arise."—[OFFICIAL REPORT, 18th June, 1951; Vol. 489, c. 68, 75.]
I hope I am not doing him any injustice if I say that his sole objection, so far as I can see, to what was proposed then was that it would damage the on-licence holders and that they might ask for a reduction in their licence fees.
I realise that times have changed. We have been told by right hon. Gentlemen and hon. Gentlemen opposite that they have pulled all the skeletons out of Government offices, that they have saved the country from bankruptcy and that we are now getting along in a most prosperous way. [HON. MEMBERS: "Hear,


hear."] They do not expect me to accede to those rather remarkable arguments, but if they are so convinced—I thought I heard some applause—surely they must support us in something which they supported then and which was only refused then on the ground that in those circumstances it was hardly time yet.
I hope that in a matter of this sort the conflict and discussions which I have just mentioned—and their nature is very obvious—will not weigh too heavily with hon. Members opposite. The conflict was that between the on-licence and the off-licence holders and the discussions were with those two sides. We know quite well that the Tory Party is completely independent of any undue tenderness towards the holders of on-licences. I am waiting for loud applause from the benches opposite. I feel certain that they would not let any feelings which they have in that direction weigh too heavily in this matter. For, let us not try to deny that the on-licence holders and the brewers have already been paid very largely in good measure for the help given by the Tory Party. Have they not had a special piece of legislation introduced in this House concerning licensed premises in the new towns, and have they not had unqualified support from the Tory Party in return for the support which the Tory Party expects to get at other times?
Cannot we, therefore, remove this perfectly absurd position in which the off-licence holders find themselves? Or do the soft hearts of hon. Members opposite now harden towards these small men? Let us remember that the off-licence holder is, by and large, a small man; and let us remember that, roughly speaking, there are only about a third of them compared with the number of on-licence holders. Furthermore, they find it a little difficult to make both ends meet. These spirits are so expensive nowadays that if a person wants to buy a small quantity at an off-licence, then, because of this absurd position, the licence holder naturally enough suffers and complains.
I ask hon. Gentlemen opposite now to show that independence of spirit in dealing with the brewing industry to which I have referred. I ask them to show their feeling for the small man and, thirdly, I ask them not to forget their own past. It is not so long since this

overwhelming argument—this massive argument—was adduced by hon. Members, who now sit opposite, in favour of this very thing. Surely they will not throw overboard with a resounding splash the Parliamentary Secretary to the Ministry of Transport and the Leader of the House. Where should we go without the guidance of the right hon. Gentleman; and what of his moral reputation? In this spirit, I ask the House to accept this Clause about spirits.

Mr. I. Mikardo: I beg to second the Motion.
After what has been said by my hon. and learned Friend the Member for Kettering (Mr. Mitchison), it is necessary for me to add very little in order to commend our proposal to the House and also to those hon. Members opposite who supported it so warmly on a previous occasion.
It is not unknown for parties, when they change sides in this House, also to change roles as well, and for each to quote in support of an argument what the other side said only a year or two previously. The only snag about this is that the procedure cuts both ways, and one quotation naturally invites a counter-quotation. But while this is normally the case, we are tonight concerned with a special instance in which hon. Gentlemen opposite will be hard put to use the technique of tu quoque, because here is an instance in which the party opposite has committed itself to a particular attitude and a particular line of policy, because their agreed plan is to remove all restrictions wherever possible. Their creed is to set the people free. We are asking them this evening to set the people free to buy a quarter bottle of spirits at any place where it is on sale. That does not seem to be a great deal to us. All we are asking is that hon. Gentlemen opposite who make it their prime creed to set the people free should give just this tiny practical example of removing a silly, irritating and quite meaningless restriction.
Spirits are sold commonly either in public houses or in off licences. Milk is sold commonly either in dairies or grocery shops. Suppose the law were that one could buy any size bottle of milk in a dairy but that anyone who went to a grocery shop would be compelled to buy a quart bottle and would not be


allowed to buy a pint bottle or a half-pint bottle of milk. Such a situation would be so obviously and manifestly ridiculous in the eyes of the whole country that any Government that sought to maintain or retain it would be laughed out of existence.
But the law with regard to the sale of bottles of spirits is no less ridiculous than that. We have to bear in mind that a certain part of the consumption of spirits—true, only a very small part, but a certain part nevertheless—is not for the purposes of entertainment or self-entertainment, but for medicinal purposes. I sometimes doubt whether all that is purported to be sold for medicinal purposes is actually sold for those purposes, but there is some that is. Some of this is bought by people who do not look upon drinking as a normal recreation or as an act of conviviality, and, indeed, possibly by people who disapprove of drinking for drinking's sake.
It is all wrong that such persons—it matters not for the purposes of my argument or the purposes of the responsibility of this House that the number of them be small—should be impaled on the horns of the dilemma described by my hon. and learned Friend that if they want to go out to buy a small quantity of spirits for medicinal purposes, they have either got to buy a much larger quantity than they want, or they must go to a public house in order to buy it. Some of those people—I respect the feelings of folk even when I happen not to share them—do not like public houses and do not like to go into public houses. It is quite wrong—I repeat, no matter how few they may be and how small the number of occasions on which this occurs—that this House should compel people to go into public houses to get what they want in the quantities in which they want to buy it.
There is one point which indicates how in the last few years this problem has intensified and become more serious. As the House knows, we have during the years since the war, and, indeed, for a period before the war, increased the practice of building large housing estates. In very many of these large housing estates there are few, if any, public houses. I have a large housing estate

in my constituency which has no public house at all. Indeed, from parts of this estate to the nearest public house is a substantial distance. In cases like that, what right have we to say that we are setting the people free when we say to them, "Here is a shop round the corner where you can go and buy what you want, but you are not free to do so unless you buy a larger quantity than you want"? And especially with the increasing tendency to build houses in large blocks with no public house for long distances—it may be for good reasons which I will not go into.
10.45 p.m.
There is no more reason to compel people to go long distances for one commodity than to compel them to go long distances for bottles of milk because only the dairy can sell small bottles and the grocery shop cannot. I do not see how on any basis, short of making oneself ridiculous, it is possible to maintain this totally anomalous position. Here is an opportunity for the Government, who have not been very forthcoming in offering concessions to the feelings of the House today, to make a concession at little or no cost to the Revenue. It is clearly a concession which would be welcomed by hon. Members on both sides of the House, and by many people outside, and which can do no real harm to anyone.
One hesitates to impute motives, but one has to ask oneself why it is we have this discrimination about spirits and not milk? In trying to answer that question one reaches the conclusion reached by my hon. and learned Friend the Member for Kettering, that there is some connection between the unfair advantage in competition given to the holders of on-licences and the continual favouritism shown by this and other Governments to the brewers and their subsidiary organisations. I am sorry to have to say it, but it seems to me that as a fact that is inescapable.
We have the party opposite saying, "Let us have free competition. Do not let us try to control things, or direct things. Let us have a display of initiative. Let us have a fair, open and free field. Let everyone come into the market on the same terms and compete


one with another. Let the best man win, with no fears and no favours, no unfair advantage and no undue restrictions." But here we have two traders in the same commodity with one being hampered by being able to sell only one quantity of that commodity.
What should we say if there was no free trading in gents' underwear: if one establishment was allowed to sell any amount of mens' shirts and another could not sell more than three at a time? We should say that potential customers were being directed from one establishment to the other. That is what is being done in the case of spirits. There is unfair discrimination between competing establishments.
I appeal to hon. Members opposite to support this proposal, now that their Government is in power, in the same way as they supported it when they were in opposition.

Mr. James Hudson: My hon. and learned Friend the Member for Kettering (Mr. Mitchison) based most of his arguments on the case made for him by hon. Members opposite, like the hon. Member for Croydon, East (Sir H. Williams) and other hon. Members to whom he referred. He also referred to me, and I suggest that if he had used my arguments instead of those of hon. Gentlemen opposite he would not have been led into inconsistencies in the proposals he put before the House. I thought the hon. Member for Reading (Mr. Mikardo), by his own statement of the case, supplied the answer to the proposal which he makes. He wants to know why there should be a difference between milk and spirits. When one examines the matter in the light of the consequences of the free drinking of spirits and the free drinking of milk, I would say that the difference is so obvious that even my hon. Friend could answer the question.

Mr. Mikardo: I hope the hon. Member will permit me to say that I am a moderate drinker of spirits and a very large drinker of milk.

Sir Herbert Williams: Perhaps the hon. Member does not know that all cases of surgical tuberculosis are due to drinking milk.

Mr. Hudson: I am still prepared to say, as I tried to prove the other night, that few would complain if there were to be an increase in the milk consumption of this country; but if there were to be a large increase of spirit drinking, there would be a general deploring of that fact, particularly by those who remember the consequence of the larger amount of spirit drinking in the past. It is because of that difference that I cannot support the contention my hon. Friends have advanced. The Excise licence shop—the bottle shop, as some people call it—is an institution added to the many which all parties in the past have said are too numerous for the general health and welfare of the community.
In the days before the bottle shop, when the main drinking institutions were the public house and the off-licence shop, the Tory Party and the Labour Party were of the opinion that there ought to be a great reduction in these places. The Excise licence shop has come as an anachronism when all parties believed that there ought to be a reduction rather than an increase in the number of places where drink could be obtained.
If people can buy spirits in smaller bottles than is now laid down by law, there will be more people drinking spirits. This will mean that later in life these people will be drinking much larger quantities of spirits. I should like to see some proposal for limiting the drinking of spirits in public houses and in off-licence shops. Such drinking has been limited in other countries.
I do not think my party ought to be putting forward a proposal to popularise the drinking of spirits. I speak very earnestly. I can hardly enter into the joking side of it, although I see the joke. I know that my hon. and learned Friend when he referred to me was trailing his coat that I might tread on it. I tread on it very respectfully, but at the same time very firmly. I put it to the House that whoever was responsible for this proposal, from whichever party, we might well be content with the little flutter of argument we have had on it and not push it further to a Division.

Sir H. Williams: If I wanted to make a rather frivolous speech in answer to that of the hon. Member for Ealing, North (Mr. J. Hudson), I would point out that all the cases of surgical tuberculosis in this country are the result of drinking milk, which causes three or four thousand deaths per annum. That does not alter the fact that when I get home tonight I shall drink some milk. I am going to take the risk. The consumption of milk has increased by about 80 per cent while the consumption of spirits has decreased since 1939, yet there are more cases of violence now than we have known for a long time.
I am delighted that the hon. and learned Member for Kettering (Mr. Mitchison) and the hon. Member for Reading, South (Mr. Mikardo) were enabled to make such good speeches after reading the speech I made on this subject in 1951. What is behind all this? A silly quarrel is going on inside what is called "The Trade." Off-licence holders are prohibited from selling less than half a bottle of sprits, and the on-licence holders can sell any quantity and think they would lose some of the trade if the proposed new Clause was carried. I think that is a complete illusion. The hon. Member for Reading, South pointed out that the people who want these quarter bottles in the off-licences are those who, for a variety of reasons, do not like going into a public house. In the old days we could get a whole bottle of Martell's Three Star brandy for 5s. 6d. A bottle now costs over 40s. and the quarter bottle would cost over 10s. I do not buy quarter bottles. I tabled an Amendment in 1951 with the same purpose in 1951, but it was differently drafted.
In view of this conflict within the licensed industry, I have put down a new Clause on the next page of the Paper to give some concession to on-licence holders. It would cost the Treasury some money. They always object to any proposal that costs money, but they cannot object to the present proposal on that ground. It would actually give the Chancellor more money and not less, and he cannot use the customary argument, "I can't afford it." I have been challenged about speaking in favour of this proposed new Clause and not voting for it. I do not think I would sacrifice this very

admirable Government for the sake of a quarter bottle of brandy; not even for a full bottle. We have done very well in the Lobby tonight, I am glad to say, and on nearly every other occasion.
I think this nonsense should be stopped. It really is a lot of nonsense. I happen to know the two protagonists on both sides. They are both personal friends of mine. One speaks for the off-licence holders and the other speaks for the on-licence holders. I have known both for many years. [An HON. MEMBER: "Who are they?"] No names, no pack-drill.
11.0 p.m.
Seriously, here are people whom I know as two personal friends, and on this issue they are both pushed by those whom they represent. I appeal to the Chancellor to have the courage on this occasion to cosh them both. [HON. MEMBERS: "Oh!"] I have been provoked into using that word by the hon. Member for Ealing, North whose guidance in this matter is not much use because, whether the Clause is accepted or not, he will not have even a quarter bottle. He is completely disinterested.
This silly discrimination ought to come to an end, and although the Chancellor, for some extraordinary, half-hearted, obstreperous and difficult reason, may not agree and says "Vote with me," I shall vote with him, but it will be with reluctance that I shall go into the Lobby. The time has come to stop what has become a bit of unadulterated nonsense.

Mr. Geoffrey Bing: I hope that those who I know hold very sincere temperance views on this side of the House will not necessarily suppose that by compelling someone to buy a larger bottle of whisky than he intended is the way to true temperance. There are people who, when they have got a larger bottle of whisky than they can afford, feel that they ought not to waste it. In those circumstances, I hope that those who are in favour of temperance will at least consider that aspect of the matter and consider that if perhaps smaller bottles of whisky were sold it might, at any rate, be an approach to a more temperate outlook. I appreciate that it is only a point of view, and that the opposite point of view can equally well be held.
I also hope that those of my hon. Friends on this side of the House who take a temperance point of view will remember that the principal opponents of this proposal are the brewers. We know that from time to time the brewers have made considerable contributions to temperance. Indeed, in order to have a temperance movement that was not contemplated by such persons as my hon. Friend the Member for Ealing, North (Mr. J. Hudson), they founded their own which put forward a number of principles in the interests of what they consider to be true temperance.
Therefore, I do hope that the temperance movement here will be a little careful in dealing with an attitude which is strongly influenced by the brewers because this is a conflict between the tied house and the free house. The off-licensees are, on the whole, free and indeed passed a resolution opposing the tie, while the unfortunate tied licensees all got together to pass a resolution which was sent round, I think, to a few Members of Parliament, saying that they were all grateful to their brewers for having tied them so thoroughly.
Perhaps I may call the Chancellor's attention to the Clause. If I may say so, I am grateful that the House has an opportunity of considering the Customs and Excise Act, 1952. I myself put down an Amendment to deal with another aspect of it, which unfortunately was not selected, and I thought for a moment that it might be because it was felt that this Act as a whole was outside the scope of the Finance Bill. I am glad to think that it is not so, and on another occasion perhaps we can deal with other difficulties which seem to me to occur in the Customs and Excise Act.
Perhaps I may address this question to the Chancellor. Does he know what is a "reputed quart" or a "reputed pint"? If he does, he is a wiser man than the brewers, and that would be a most unusual thing for anyone sitting on the opposite side of the House. Perhaps I may refer him to the way in which this matter is delicately dealt with in the "Brewers' Almanac." After dealing with what are proper weights and measures, that great work then comes to a kind of miserable footnote which refers to beer casks and "to a capacity in excess

of their nominal capacity," whatever that means. It also says:
The reputed pint and the reputed quart bottle are nominally one-twelfth and one-sixth of a gallon respectively, but there is some variation in practice.
How, under such circumstances, can one prosecute a man for selling a reputed quart or a reputed pint if there is no definition of what a reputed pint or a reputed quart is? But the matter is even worse than that, because to sell anything either by the reputed quart or the reputed pint is illegal.
This was a matter which was dealt with rather more in sorrow than in anger by the Committee appointed by the Chancellor of the Exchequer on Weights and Measures Legislation. If the Chancellor will turn to paragraph 355 of their Report, he will see the following:
Reference has already been made to the fact that, although the terms 'reputed quart' and 'reputed pint' are illegal for use in trade, they are used in certain statutes. We consider that all reference to these terms should be removed from the Statute Book at the earliest possible.
Here is an opportunity for the Chancellor to carry out that valuable recommendation. There is no point in having these terms on the Statute Book, because they do not mean anything. Nobody could be prosecuted for selling what was less than a reputed pint because what is a reputed pint is what he says it is.

Sir H. Williams: If the hon. and learned Gentleman will read Section 149 of the Customs and Excise Consolidation Act of last year, he will find this reference to the reputed pint as late as last Session.

Mr. Bing: It is deplorable, and we should all get together to put the matter right. These are forms of weights and measures which, in fact, are illegal. Why should we continue to punish people because they refuse to sell things by a measure declared by Parliament to be illegal? That seems an illogical attitude.
I do not want to delay the Chancellor, but I want to ask him why he should not remove the blemish in this particular regard. I have one further word to make on the general issue. There are about five-and-a-half off-licences for every 10,000 of the population. So they are, as compared with public houses, only


about one-third or one-fourth the fraction, but they are increasing in numbers more rapidly than public houses. This is because public houses do not provide those services the public require. They do not provide, for instance, cups of tea.
One reason people buy from an off-licence is because there is one member of a family who wants a small drink while the other three members want a cup of tea. If one wants to bring home a bottle of drink, however guided or misguided it may be, according to one's feelings, it enables people to drink as their fancy suits them. It does not compel them only to drink spirits, as is the case if they go into a public house. We should not stand in the way of people who are opposing the domination of the brewers, as the off-licensees are.
It is interesting to note that so long as hon. Gentlemen opposite could merely strike, but not wound, they were only too willing to make a feint against the brewers. But, when they felt their votes would achieve what they were always promising their supporters to do, they would not cast them in this way. If this matter goes to a Division I hope that all my hon. Friends will support a vote which is in essence an anti-brewers vote and will support what is a provision to enable people to buy smaller bottles of whisky if they do not wish to buy larger ones. I am glad that my hon. Friends have raised the matter, and I hope that at the next Budget we shall have the opportunity to discuss a number of other matters in the Customs and Excise Act which, like the problem of the gravity of beer, require to be discussed in this House.

Mr. Maudling: It was quite clear that this debate would be an amusing and vigorous one, partly because it would give the hon. and learned Member for Hornchurch (Mr. Bing) a chance to renew his wider-ranging onslaught on the brewers in general and the drafting of the Customs and Excise Act in particular, and hon. Members opposite a chance to quote from speeches made on 18th June. 1951. The hon. and learned Member for Kettering (Mr. Mitchison) has made considerable use of arguments put forward on that occasion by those who are now on this side of the House. I can say

two things in reply. The first is that whatever was said in the debate the hon. and learned Member's Government did nothing. The second is that the hon. and learned Member, his hon. Friend the Member for Reading, South (Mr. Mikardo) and the hon. and learned Member for Hornchurch did not add their voices in support of this urgent matter at a time when those voices carried such great influence with the then Government.

Mr. Anthony Crosland: Three Labour Members did.

Mr. Maudling: But none of the three was prepared to support it in the Lobby.
As the right hon. Member for Battersea, North (Mr. Jay) said, there is here a real conflict of interest, indeed a historical controversy with a longstanding background. There are considerable arguments for saying that the present law is a restriction on the public's power to spend money which should be swept away. There is, of course, a good deal of confusion as to what can and cannot be sold. I have found that in my own experience—considerably to my annoyance at times when I have been told that an off-licensee was not in a position to sell something which I have found later he could have sold.
The position is slightly anomalous and confusing. For example, I am told that an assortment of four quarter-bottles of French liqueurs can be sold, and so can an assortment of British liqueurs, whatever those are, and of British gin, but not a Scotch whisky and a foreign brandy, and not an assortment of British gin and foreign liqueurs. There is also the difficulty that a member of the public who does not wish to go to a public house but wishes to buy brandy has to go to a public house because the small brandy that he requires cannot legally be sold at an off-licence.
Those are the sort of arguments put forward over a period in support of this proposed amendment of the law. On the other hand, there are arguments sincerely put forward by the hon. Member for Ealing, North (Mr. J. Hudson) and others who think that the proposed new Clause is a bad thing in principle, because it would extend the temptation to people to drink more spirits. I do not


know whether, on balance, it would lead to drinking more or drinking less. People might be inclined to drink more at home and less in the public house—I do not know. But there is clearly a considerable measure of public opinion opposing this proposal.
There is also the feeling of the on-licence holders that it would be quite unfair to sweep away this restriction on the sale of small bottles by the off-licence holders. It is not the Brewers' Society, as the hon. and learned Member for Hornchurch would have us suppose, who are active in opposing this proposal, but the on-licence holders. I understand that the Brewers' Society were officially consulted some two years ago and they did not wish to make representations on the subject.

Mr. Bing: Would the hon. Gentleman give the House the figures of the number of licensees who are tied and those who are free, respectively, who have made this protest?

11.15 p.m.

Mr. Maudling: I have not the figures available, but what I have given are the facts.
The position in 1951 when this subject was last debated was that there was this unresolved conflict between the two sides of the trade, and there was also this considerable difference in genuine public opinion. In those circumstances the right hon. Gentleman the Member for Batter-sea, North (Mr. Jay) said that the Government were not prepared to take any action on these lines. In 1952 the Chancellor of the Exchequer, in answer to a Question, said that he would be quite willing to review this question in the light of agreed proposals not involving a loss to the Revenue. It might be fairly easy to obtain agreement with substantial loss of revenue, but in present circumstances my right hon. Friend cannot contemplate that.
But my right hon. Friend's offer still stands, and he is still willing to review this question if proposals can be put forward introducing an agreement not involving loss of revenue. But, in the absence of such agreement, or evidence that there is widespread public agitation and strong enough feeling to counterbalance the feeling on the other side, my

right hon. Friend feels he must maintain the position, and he cannot in those circumstances accept the new Clause.

Mr. Mitchison: For two reasons—first of all because this matter appears to be going to be decided by the brewers, and secondly because I have the highest possible regard for my hon. Friend the Member for Ealing, North (Mr. Hudson), whose opinions I do not always share—I beg to ask leave to withdraw the Motion.
Motion and Clause, by leave, withdrawn.

Mr. Gaitskell: I beg to move, "That further consideration of the Bill, as amended, be adjourned."
It will not have escaped notice that during the last debate no member of the Opposition Front Bench rose to speak. This was not because of any pusillanimity, fear, or anxiety in our minds about a difficult and delicate situation between the Member for Ealing, North (Mr. J. Hudson), and the hon. Members for Kettering (Mr. Mitchison), Hornchurch (Mr. Bing), and Reading, South (Mr. Mikardo), but because I felt that the arguments had been so thoroughly canvassed that, for once, there was nothing to be said. It was also in my mind that it was getting rather late and that we might adjourn further consideration of the Bill until to-morrow. The next new Clause is an important one, and I feel sure the Chancellor will agree it is much better that we should discuss it in the afternoon rather than at a late hour this evening. I hope therefore he will be able to accept the Motion.

Mr. R. A. Butler: Under certain conditions I would be ready to accept this Motion. We have almost finished the new Clauses. We have next a subject which we debated in Committee, and each year previously, so at least we know the arguments, and may feel quite satisfied, despite the extension which has been drafted into it, that it will not take a great deal of time. I mention this because we might have some difficulty in finishing the Bill round about the time we had hoped. If we do not take too long over the new Clauses, then we should finish the Bill at a reasonable hour. In view of the need to press forward with public business, we had


better take the risk in the circumstances and let the right hon. Gentleman deploy his case on a rather more massive front on the next Clause in the proper light of day. In the circumstances, and on the understanding we do finish the Bill at a reasonable hour, I would be ready to accept the Motion.

Bill, as amended (in Committee and on recommittal), to be further considered Tomorrow.

Orders of the Day — DOUBLE TAXATION RELIEF

Resolved,
That an humble Address be presented to Her Majesty, praying that on the ratification by the Belgian Government of the Convention set out in the Schedule to the Draft of an Order in Council, entitled the Double Taxation Relief (Taxes on Income) (Belgium) Order, 1953, a copy of which was laid before this House on 14th May, an Order may be made in the form of that Draft.—[Mr. R. A. Butler.]

To be presented by Privy Councillors or Members of Her Majesty's Household.

WOOD GREEN BUNGALOWS (REPAIRS)

Motion made, and Question proposed, "That this House do now adjourn."—[Mr. Vosper.]

11.20 p.m.

Mr. William Irving: I wish, first, to take the opportunity of expressing our regret that the Minister of Housing and Local Government is indisposed and our wish that he will soon be restored to the Government Front Bench.
In the spring and autumn of 1946–47, the Ministry of Works erected on the Wood Green Borough Council's Perth Road playing fields 89 temporary aluminium bungalows to accommodate families on the council's housing list. The bungalows, which remained the property of the Government, were of prefabricated construction. The roofs were of very low pitch, and the underside of the sloping roof had an insulation attached to it by bitumastic adhesive. Within two years of the occupation of the bungalows the summer heat melted the adhesive and the weight of the insulation caused it to part from the metal, leaving the under side of the roof bare to the elements. The result was that during the cold winter nights there was acute condensation on the exposed metal surface and water dripped on the furniture and the bed clothes, causing great discomfort to the occupants.
Another danger is that there is electrical wiring in the U-shaped members of the roof structure, and these members fill with moisture because of condensation. It is only a matter of time before a short-circuit occurs, possibly with very serious consequences. On one occasion at least the fire brigade was called for this reason.
The tenants have had to put up with deplorable conditions for five years, and many complaints have been received. Investigations were made by the council's officers, and exploratory remedial measures were taken to alleviate the trouble. The Ministry's officials have inspected the bungalows and have agreed to the carrying out of the remedial work.
In October, 1951, the council received the proposals of the Ministry of Local Government and Planning for combating the condensation in the bungalows, which expressed the view that the cost of carrying out the measures should not exceed £25–£30 per bungalow. A further communication about the financial arrangement was promised to local authorities, but this has never materialised.
As a result of a further examination of the bungalows, it appeared that 14 of the 89 were badly affected and should receive treatment on the lines suggested by the Ministry of Housing and Local Government on the recommendations of the Department's officials. Following the inspection, quotations were invited from three firms for carrying out remedial measures to the Ministry's specification. None of the firms had any experience of this type of building and quoted for only one bungalow, reserving the right to amend the quotation after having had experience of the pilot bungalow.
The lowest quotation received was from a local firm, amounting to £26 2s. 9d., which was accepted by the Ministry of Housing and Local Government. On completion of the work to the one bungalow, the firm quoting the lowest tender put in an amended quotation for £33 3s. 6d. per bungalow for the remaining work. This figure has not been accepted by the Ministry.
The council consider that the whole cost of the remedial measures, in addition to repairs and decorations, should be borne by the Government. Now, arising from this complaint which I received from the borough council, I put down a Question to the Minister of Housing and Local Government to ask if the Minister would increase the figure of £30 allowed by his Department for remedial measures to combat condensation in these temporary bungalows, and to agree to meet the cost of repairs arising directly from that condensation. I thought that that was a reasonable request, and expected a sympathetic reply; but the reply, when I had it, was disappointing. It was to the effect that £30 had generally proved adequate to meet the cost of the remedial measures recommended by the Building Research Station, particulars of which had been

sent to Wood Green Borough Council in September, 1951.
I suggest that costs do not remain stationary in these years, and this added burden is proving to be a great difficulty to Wood Green and other local authorities. We have heard today about the Exchequer Equalisation Grant, and we have also heard recently about de-rating, and since that latter provision was placed on the Statute Book, the burden on local authorities has increased considerably with the result that last year new high levels were reached in increased rates throughout the country. I hope that tonight the Parliamentary Secretary will say that he will meet the cost of these remedial measures; for one thing, the property is not that of the borough council. It is the property of the Government, and the council is merely acting as an agent for the Government which. I suggest, ought reasonably to accept the responsibility.

11.28 p.m.

The Parliamentary Secretary to the Ministry of Housing and Local Government (Mr. Marples): I am grateful to the hon. Member for Wood Green (Mr. Irving) for his expression of sympathy for my right hon. Friend, who, at this moment, is in hospital, and I will convey those sentiments to him. I am sure he will join with me in appreciation of them.
The House has just listened to a feast of reason on a subject which the hon. Member has raised on more than one occasion. He has given it unremitting and devoted attention, but I would like at the outset to consider the background of the aluminium bungalows because there has been some difficulty due to condensation; and if I call them A-L-U-M-I-N-U-M, instead of "aluminium," I hope that the House will forgive me. During an extensive tour of Canada and the United States, nobody understood me unless I referred to "aluminum," and I find it difficult now to use the word more currently used here.
In March, 1950, trouble occurred in some of the aluminium bungalows, and was found to be due to condensation. They were erected by the previous administration, and the fault was discovered during their term of office. The Building Research Station was invited to examine the bungalows. May I explain that this organisation is the technical branch of


the Government concerned with technical defects and errors in buildings of all sorts. It has no political connections. But it has the equipment, and the personnel, and resources to examine any defect. It found that the only way in which the condensation could be removed, with any guarantee of satisfaction, was by thermal insulation of the roofs. That is very expensive, and the experts also found that in most cases, satisfaction could be given by modifying the existing heating systems.
Therefore, the building research station, in August, 1951, advised the then Government—not this Administration, but the previous one—that two alternative methods of amending the heating system should be adopted. Their cost was £25 to £30 for each bungalow, as the hon. Member has said. Full details of these methods were circulated by the Government—again, I stress that that was the previous Administration—and it was agreed, Treasury consent being obtained, that a cost of not more than £30 should be borne by the Exchequer. This was discussed with the local authority associations, who agreed to it.
There were 42,000 of the aluminium bungalows in the country as a whole, of which Wood Green had 89, or just under one-quarter of 1 per cent. Of the 42,000, only 10 per cent., or 4,200, had this defect. Therefore 90 per cent. were satisfactory and 10 per cent. unsatisfactory. Wood Green had 14 which were unsatisfactory, which was just over one-quarter of 1 per cent. of the total that were unsatisfactory. Therefore, Wood Green is a representative sample of the country as a whole. They had just under one-quarter of 1 per cent. of the total bungalows, and just over one-quarter of 1 per cent. of those that were defective were in the hon. Gentleman's constituency. That is the background.
Consider the case of Wood Green in particular. Wood Green, I think, made a mistake. Details of the remedial measures which should be taken were issued to local authorities in September, 1951. Had Wood Green been like other authorities and effected the remedial measures in August and September, 1951, or perhaps later that year, they would have been able to carry out those measures at a cost of £30 or less per

bungalow. Wood Green did not, however, act on the advice given by the hon. Gentleman's own Government. They experimented themselves, and they did not act with that degree of celerity with which one would expect Wood Green to act.

Mr. Irving: Was that not because a further circular was promised in 1951, but it never materialised? They may have been waiting for that circular.

Mr. Marples: The reason why Wood Green were tardy and a little timorous is not for me to say.

Mr. Irving: I think that that is the answer.

Mr. Marples: It may be the reason, but it is not an excuse.
Most local authorities carried out the remedial measures at once, at a cost of under £30. Wood Green tried some of their own measures. They had their own technicians. They altered the ventilators, put lining on the ceilings, and carried out their own remedial measures for about 12 months. Their remedial measures were not successful, however, whereas those of the Building Research Station were successful. Therefore, it was not until a year later, in September, 1952, 12 months after the original instructions were sent out to local authorities, that Wood Green decided to carry out the recommendations of the Building Research Station.

Mr. Irving: Is it not true to say that they carried out this remedial work with the consent of the Ministry's officials?

Mr. Marples: It may be true, but it does not absolve Wood Green from responsibility. The Ministry officials did not control the matter and did not take the initiative. The initiative came from Wood Green, and they took it entirely on their own responsibility.
As I say, in September, 1952, after waiting a year, Wood Green tried the measures recommended by the hon. Gentleman's own Government on advice from the Building Research Station. They had 14 houses suffering from condensation, but they were rather timid and ventured only on one house. They got the work for that one carried out for the sum of £28. When that was successful, they waited until January, 1953—a


considerable time after September, 1951—to carry out remedial measures on the remaining 13 houses. On this occasion it came to £33.
The hon. Member said that costs did not remain stationary, and I agree. That is all the more reason why Wood Green should have moved earlier in the matter rather than later. Shakespeare said:
Call back yesterday, bid time return.
But time will not return. It would appear that this will cost Wood Green more than about £30 which most local authorities paid. There is no hope of the Government providing more than £30.

Mr. Irving: How can the local authority carry out the work if no contractor will contract for less than £33?

Mr. Marples: The point I am trying to make is that from September, 1951, to September, 1952, the work could have been carried out for £30. If Wood Green does not move until 1953, 1954, 1955 or 1956, obviously it will cost more, and not only from the contractural point of view. It is a trite saying, but "A stitch in time saves nine." This is a powerful argument in the case of repairs. We all know that if a leaking roof or a sea wall is not repaired immediately more damage is done. The fault here lies with the Wood Green authority. If they had carried out the work straight away it would have been done, as for other local authorities, for less than £30. There is no hope that this will be reviewed by the Government.

Mr. Irving: Fourteen of the 89 have been affected and quite a number more may be affected this year or next year. Are we to take it that £30 is all that will be allowed in spite of rising costs?

Mr. Marples: If it has not occurred already it is hardly likely to occur in the future.

Mr. Irving: I hope the Minister is right.

Mr. Marples: It only occurs in houses where conditions are exposed or there is a great deal of moisture.
The £30 grant will not be increased, I want to make that clear. But if the total annual outgoings on the aluminium bungalows are in excess of £8 the local authority can apply for a reduction. So far there has been no sign of Wood Green wishing to take advantage of that facility.
Wood Green is the only authority I know about who have complained. Of the 42,000 bungalows, 4,200 were found with moisture. Most of them have been settled satisfactorily. The reason the £30 was not adequate in the case of Wood Green was because the local authority did not carry out the work quickly enough. They had their own ideas of how to remedy the defect. Unfortunately their ideas were not as sound as those of the Building Research Station. If they had been the authority would not afterwards have carried out the recommendations of the Building Research Station. If Wood Green spends more than £8 a year on the maintenance of the bungalows there is provision whereby the council can make application to the Minister.

Mr. Irving: Does that £8 include decoration? Because of condensation, the bill for decoration has increased considerably.

Mr. Marples: The Wood Green Council has given no sign, so far, of wishing to make a claim under the Section. If it does make a claim, the Minister or I will consider it sympathetically.

Adjourned accordingly at Nineteen Minutes to Twelve o'Clock.